What is franchising?
Franchising is a way of expanding a successful brand, as well as a way of helping someone start and run their own business, with full training and support every step of the way.
The franchising model is simple: a company (franchisor) grants rights to an individual (franchisee), which entitles the franchisee to run their own business, under the brand, support and proven systems of the franchisor. It’s like a blueprint for running a business. If you’ve ever ordered food from Domino’s Pizza or Subway in the UK, then the store you used was run by a franchisee, not a huge international office. It’s the franchisee’s business – they’re responsible for the staff and the products – but they operate using a bigger brand that brings them customer loyalty, just one of several benefits.
Many well-known brands are wholly or partly franchised, including Clarks,
Thorntons, O2, Toni&Guy, McDonald’s, Water Babies and Marston’s. There’s also a host of growing companies in just about every sector, from pet care to health care. The scale of franchising is surprising to many: there are more than 900 businesses offering franchises in the UK, and the sector is worth over £15billion and 600,000 jobs to the economy.
Self-employment with support The idea is that the franchisor has tried and tested the business, knows what works, and is expanding its brand by seeking people who want to replicate that success for themselves. Those self-employed franchisees have the benefit of being part of a larger brand, along with access to comprehensive training and support on everything from business planning to marketing to financial administration. There is also an operations manual which explains the day-to-day running of the business.
That means that almost no matter what situation a franchisee faces, they can turn to head office – as well as any other franchisees also in the network – for real- life advice and help on how to overcome a challenge. In return for that support, franchisees pay an initial fee to join the network, as well as ongoing monthly royalties, called management service fees, which are most commonly a small percentage of turnover.
Am I suited to being a franchisee? One of the best things about franchising is that it’s so inclusive. Old or young, male or female, individuals or partners, any race or religion, just about any background – with so many businesses in franchising there are options for almost every budget and passion.
That said, there are traits shared by the most successful franchisees and are crucial for going into business for yourself. Passion is high on that list – you need to enjoy what you do and be motivated to wake up each morning ready to drive your business forwards. Similarly, dedication and the tenacity to overcome challenges are also essential. While working with proven systems, a franchisee’s success still depends on their own hard work and willingness to do whatever it takes as a business owner, so drive is critical.
Where to begin? With so many brands seeking franchisees, it can be difficult to know where to start. Being honest with yourself on the type of business that will suit your lifestyle, skills, budget and desired profitability is a good
place to start narrowing down the search. Because franchising offers substantial initial and ongoing training, most franchises do not require previous experience in an industry; it’s transferable skills that are all-important. That allows you to potentially re-focus your career on something you have a true passion for.
“There are more than 900 businesses offering franchises in the UK”
Research, research, research is the mantra required. Take your time, and do substantial due diligence when you’ve found something of interest to make sure the opportunity is both what it says it is and is right for you. Understand what will be required on a daily basis, get to know the people behind the brand at head office, and check that you understand the financial commitment required, including working capital. Finally, speak to existing franchisees to make sure forecasts are mirrored in reality.
Eyes wide open
Franchising has a wonderful track record in the UK, with over 90 per cent of franchisees reporting profitability in each of the last 20-plus years, and less than five per cent closing through commercial failure.
But don’t be fooled into thinking franchising is a ‘can’t miss’ scenario. You’re going to need huge amounts of work, possibly long hours and a never-quit attitude to succeed; it’s not a silver bullet. When joining a franchise it’s important
to approach things calmly, having taken your time and completed your research. Franchising is a serious business proposition and must be approached as such. Before you invest, it’s vitally important to make sure that your franchisor will offer you the support and training you need. It’s critical to get your franchise agreement (the legal document governing the franchise relationship) checked by a franchise solicitor prior to signing it, so you’re not signing up to something that you later regret – as with all walks of life, there are some unscrupulous operators out there. The bfa accredits franchisors against strict membership criteria, so you can take extra peace of mind if the franchise you’re considering is a member. But still do your research! If you find the right franchise for you, it could be the positive life-changing experience you’ve been looking for.
September 2016 |
BusinessFranchise.com | 13
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122