Taking up a franchise is becoming popular to more and more people due to the present difficult economic climate. As government and private sector employers continue to make cut-backs and redundancies, the idea of becoming your own own boss can be very appealing.
Buying a franchise is a way of starting your own business with the support of a company that has experience and customer loyalty, if well chosen, and this can greatly improve the chances of your business succeeding.
A franchise is a business like any other, but it is one based on a tried and tested model that you can buy into.
The big advantage is that by purchasing a franchise you get an up-and-working business model that has already been marketed - maybe a well-known brand or trademark to use and a training and support programme. All of which makes it more likely that your new business will succeed. The franchise idea you choose should have been tried and tested and be ready to start making you money.
In return for your franchise business you'll need to pay a combination of an up-front payment, monthly fee and/or a percentage of profits, and/or renewal fees. You may also have to purchase some or all of your stock from the franchisor. The franchisor has already set up the business in another area and hopefully ironed out all the difficulties and proved that their business model works. They will have developed the business and will have trademarks, logos and branding that you can capitalise on.
They may run national advertising on TV, in newspapers and magazines or online, and they may supply you with customers or enquiries, or help you generate leads. If you haven't investigated franchising before, you'll be surprised at how many well known and high street names are franchises.
The help you receive in setting up will depend on the type of franchise, but a franchisor might assist with any or all of the following: raising finance, choosing premises, training, recruitment, PR and marketing.
As with any business opportunity, you need to look very carefully before you commit yourself to a franchise.
Always, always, always take independent professional advice from a solicitor (preferably one that specialises in franchise work) and an accountant before investing. A few hundreds spent on professional fees before you sign up can save you many thousands later on.
This list is by no means comprehensive, but it does contain a few 'must do's' when investigating a possible franchise business (or indeed any business opportunity).
Why a franchise? Could you set up the business as well under your own steam? Is the market expanding, static, shrinking? What about the competition?
Is the franchisor sound financially? How supportive are they once they've had your fee? Do carefully research - Google them - then Google them again with their name followed by 'sucks' in the query box - you'll be amazed at what this can reveal!
Get their accounts from Companies house and get your accountant to take a look at them.
How are other franchisees performing? Don't take the franchisor's word, talk to franchisees in private.
Don't rely on franchisees suggested by the franchisor, instead find out where other franchisees are based and be your own investigator. Take time and watch their business - are they getting enough customers? Purchase from them incognito, send mystery shoppers in, and talk to their customers.
Find out if the cost of the franchise has gone up or down, and if so why is
this? Are they happpy with support and training? Are they getting a good deal
on advertising? Are they making money?
What about stock - are they saving money because of the bulk buying power of the franchisor, or are they being forced to pay above market prices because they are not allowed under their contract to buy elsewhere?
Who are the competition? Is the market expanding or shrinking? What exclusivity will you have?
What if you don't hit the cash-flow projections by 10%, 20%, 50%? What if you get sick?
What if your business fails? What if the franchisor goes bust?
Conversely - what if your franchise performs well and you want to sell it / lease it / give it to your kids? What is your exit strategy? How much will the franchisor want to transfer or renew the franchise?
Franchise exhibitions and seminars take place regularly around the country, and it's always worth going along to these as you can pick up a lot of useful ideas and information which can help ensure you make the right choice.
Finally another reminder - always take professional advice before you sign up to a franchise.
It's all too easy to look at new business opportunities through rose-tinted glasses. Input from an accountant, solicitor, business bank manager and even friends and family can highlight potential problems and pitfalls you may have missed. Google to find professionals who specialise in dealing with franchises.
Good advice from a solicitor or accountant who knows the franchise market can be worth its weight in gold!
The range of business types available to the potential franchisor is huge and growing all the time. Some of the more popular franchise options are shown below:
Accountancy | Financial services | Book keeping
Business consulting and training | Coaching and Personal Development | Business cost reduction
Care - Domiciliary care | Nursing care | Domestic services |
Car alloy wheel refurbishment | Car dent and paint repair | Car repairs | Car windscreen repair
Cleaning - Carpet cleaning | Commercial cleaning | Domestic cleaning | Oven cleaning
Childrens services - Nurseries | Fitness| Education | Gifts
Computer repair | Web design
Courier services | Mail deliveries
Dating - Speed dating | Matchmaking
Education - Nurseries | Tutoring
Estate agency | Estate agents boards | Property lettings | Overseas property agent
Food - Fast food | Sandwich bar | Health food | Coffee outlet | Juice bars | Frozen yoghurt | Milkshakes
Fitness Training | Gyms | Slimming clubs
Garden Maintenance | Lawn care | Pest control
Health and Beauty | Spa | Cosmetics | Hair and Nail care | Perfumes | Electronic cigarettes
Home Improvement | Bathroom and Kitchen | Conservatories | Loft extensions
Marketing | Signs | Leaflet and directory
Pet care - Pet Food | Grooming | Pet sitting | Dog walking | Dog training | Kennels
Printing | Vehicle graphics | Vinyl signs | Screen printing
Retailing and merchandising | Confectionery | Greetings cards | Perfumes
Training | Tuition
Travel - Discount hotels | Travel brokers | International holiday estate agent
Vending machines - Coffee | Crepes | Health food | Water cooler| Sweets | Greetings cards|
Window repair | Auto windscreen replacement and chip repair | Business repair
More information (external links - open in new window)
The British Franchise Association
The Franchise Magazine
The UK Franchise Exhibition