FRANCHISE ADVICE
Why should I buy a fra nchise?
Investing in a proven business is safer than a start up, Suzie McCaff ert y of Platinum Wave outlines the benefits
S
urely you’d have to be mad to buy a franchise? If you want to have your own business, why not just start one
and save yourself all the upfront fees, ongoing royalties and restrictions? Many people dream of having their
own business one day, but the reality is that you have to fi rst have a great idea for a business and then determine how to run it profi tably, followed by fi nding suffi cient funds to launch your, as yet, unproven new venture. Of course, for the true entrepreneur, this is half the appeal, but for the slightly more risk-averse, franchising offers the opportunity to own and operate your own business with the benefi t of a proven business model, recognised brand, training, support and myriad additional benefi ts, that may include anything from increased buying power to a supportive network of franchisees sharing best practice and pooling resources for national marketing campaigns.
Impressive stats In 2018, the British Franchise Association and NatWest produced their latest report on the health of the UK franchise industry. Given the painfully high failure rates for independent startups, the report makes attractive reading for anyone considering going into business for themselves. Here are some of the highlights: • The contribution of franchising to the UK economy is £17.2billion
• The number of franchisee-owned businesses has increased to 48,600
• The total number of people employed in franchising in the UK is 710,000
• 93 per cent of franchisee-owned units reported profi tability
• Over ½ of franchised businesses turn over more than £250,000
• 18 per cent of franchisees are now under 30
What makes a good franchisee? If the majority of business startups close their doors before reaching year fi ve, then 93 per cent of franchisee-owned units reporting profi tability is a staggeringly impressive statistic. From the point of view of someone
considering investing in a franchise model, here’s some great opening advice: do not invest in someone’s great idea, invest in a proven business. Franchising is all about the replication of a successful business. Now, that’s not to say you should only consider a franchise that’s been around for 20 years and has 100 franchisees, simply that you must only invest in a franchisor who has built a viable business, created a strong brand, proven their business model and marketing systems, properly documented all the relevant systems and procedures and is going to provide you with comprehensive training and ongoing support while you run your operation. So, would you make a good franchisee
– are you a born entrepreneur or are you prepared to follow a strict model dictated by someone else?
We meet prospective franchisees all the time who consider themselves as natural entrepreneurs – I think we all like to think of ourselves as being entrepreneurial, but does it make you good franchisee material? For example, if you want to own a fast-food business and you want to be able to give it a great name, design the menu, create a logo, choose the staff uniform and set your own prices, then you will need to start your own business; becoming a franchisee will not tick your boxes. Why? Because you invest in a franchise to get a proven business model… and that model needs to be followed to the letter. That’s how franchise brands create the same customer experience no matter which outlet you visit.
How to choose a brand Assuming you’re happy to embrace the notion of following a system, then there’s the question of what you hope to achieve from having your own business. You need to be very honest with yourself about your motivations if you’re going to choose the right franchise. If your goal is to make millions, then make sure you are choosing a franchise model that can provide you with that kind of earning capacity. If you want a business that allows you to choose your own hours, giving you the freedom to work around your family commitments or hobbies and interests, then, similarly, you need to choose a brand than can accommodate this. Both examples exist, you just need to make sure you and the franchisor are on the same page. So, invest in a franchise or go it alone?
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