If you’re considering going into business by yourself, you’re faced with a number of options – should you buy an existing business, start from scratch, go into business with a partner, or buy into a franchise?
It’s worth considering your options and doing your homework so you can make the right decision for you. Don’t be seduced by the first thing that comes along, take your time to ensure you make a wise business move.
First of all, let’s be clear about what a franchise is:
A Franchise is a company that licenses their trade name to another person or party.
And a Franchisee is a person or business that has paid to trade under the trade name of the franchisor.
Examples of franchises include Avis Rent a Car, Signs Express and Subway, plus 100’s of other businesses across the country.
And it’s an industry that accounts for far more business in the UK than you may think. According to a NatWest/British Franchise Association survey in 2013:
- There are over 900 franchise systems in the UK
- 40,000 plus franchisees
- £13.7 billion contribution to UK Ltd
- 81% of franchise businesses believe they have a competitive advantage over other small businesses because they are franchisees
- More people are employed in franchising than in the armed forces
So, is franchising for you?
Here is a list of aspects about running a franchise for you to consider. There are some distinct advantages as follows:
- If you don’t have a business idea of your own, it doesn’t matter, do your research to see what franchise business really interests you.
- You’ll receive support and training to speed you along the learning curve of how to run a successful business.
- Minimise risk and see a quicker return on investment by following a tried and trusted business model. Franchises take away the guess-work of running a business.
- You’re not alone – learn from the experiences of other franchisees, and grow from the support you’ll receive from being part of a bigger company.
- Securing bank finance is more likely if you are investing into a franchise business than if you are setting up by yourself. Banks see franchises as a less risky business proposition.
- There is a lower risk of failure than with a brand new business. – You benefit from being part of a well-known brand and the business will gain exposure through advertising and marketing at franchise level.
- You can be your own boss and work on your terms.
And let’s be realistic, franchising isn’t for everyone:
- As with most businesses, it’s hard work, not for the faint hearted and you are responsible for the success or failure of your franchise.
- You will pay fees to the franchisor and possibly a percentage of profits.
- You are not in total control of brand reputation.
- You may feel constrained by the terms of the franchise agreement – always check out the finer detail before you commit.
- If you think your ideas are better, franchising may not be right for you – you may be more suited to starting your own business. – Market share may be eroded by an influx of new franchisees – check your territory boundaries carefully.
- It is a long term commitment, be prepared for it.
How much does it cost?
It depends – on the size and success rate of the business. Larger, well-known franchises for example, are far more expensive than smaller High St businesses, but then you’d expect them to be.
You’ll pay between £125,000 and £325,000 for a major food based franchise, or as little as just a few thousand pounds for a little known, relatively small franchise.
Consider your ability to raise funds, how much you are willing to invest, and the level of rewards you seek.
What are the risks?
As with all businesses, there are risks associated with running a franchise, however 92% of franchise businesses succeed compared to 50% of new, start-up businesses. It’s a lower-risk option than going it alone.
A word of caution
Always do your homework, seek professional advice from an independent authority, one that specialises in franchise advice, and can guide you throughout and carry out the due diligence required to ensure you make a sound business investment.
Then it would be good to talk to the team here at Bardon – home of 4 very successful franchise businesses.
At The Bardon Group we take your success seriously, we give you all the support and training you need to look after every aspect of your business, from finance to marketing, employment to continued professional development.
And because we have 4 very well known brands, you have a choice of which business sector appeals to you the most.
Choose from the following:
- Kall Kwik – a very recognisable High St name, providing printing, design and other business services to the business community.
- ComputerXplorers – delivering high quality, fun, educational tutoring to primary school children.
- techclean – offering a comprehensive range of specialist IT cleaning services to a diverse range of customers.
- Recognition Express – providing businesses and charities with personalised promotional items, incentives and gifts.
Whichever one suits your interests, there’s a tried and trusted business model in place that’s delivering attractive returns for our franchisees right now.
There’s no hard sell here, just honest, detailed information and advice to help you decide whether franchising is right for you.