Taking on a Franchise

Typically the owner of a business ( the franchisor ) grants a person the right to trade using their business model, brand name and ideas. In exchange for this, the franchisee pays an initial fee and an annual royalty to the franchisor. Quite often the person taking out the franchise will only be granted the right to trade in a specific geographical area.

Examples of typical franchises include Burger king, Subway, O’Brien’s and Pronta –Print . There are thousands of franchises available in the UK in all business fields.

Who would choose a franchise ?

If a person wants to run a business, but is not confident of their ability to get things off the ground, then a franchise could be the answer. Basically, the franchisor will guide you every step of the way, and the end result is that your shop will be virtually identical in look and operation to the rest of the chain. In some cases, the franchisor will help you find a suitable property as well. As with any other business choice, there are pros and cons to consider , before you decide if franchising is the best way forward for you.

Advantages of taking on a franchise

• You get to open your business on a proven business model

• Advice and information should be readily available.

• You won’t need to spend time considering interior décor, equipment needs, suppliers, or a menu. The franchisor will supply a blueprint for all of this and more.

• You will be able to speak to other franchisors about their experiences and probably receive training in an existing shop.

• You will have more time to concentrate on the day to day running of your business.

• You will have the benefit of an established brand, and this should translate to higher sales through higher customer confidence.

Disadvantages

• You will have to pay an upfront sum, which is called the initial franchise fee. This sum is non-refundable if the business doesn’t work out. In addition to this, there is usually an annual royalty due as well, normally a percentage of sales. The initial fee can be anything from £7000 to £20,000. For a business start up, this is serious capital.

• There is very little flexibility in the business model. You have to stick to the guidelines laid down by the franchisor, you can’t change the décor or the menu, for example. If you enjoy creativity, this can be stifling.

• If there is friction between the franchisor and the franchisee, the latter invariably comes off worse. Arguments or disagreements can cause big headaches for the franchisee. At times like this, you realise that running a franchise doesn’t really make you make you the boss, you are still answerable to others. Surely the idea of independence was a factor in deciding to become self employed ?

• Some franchisors help you find a suitable location, but insist that the lease of the property is in their name, not yours. If things go wrong, you can’t just drop the franchise and try something else. If the lease is not in your name, you aren’t really in business for yourself, but more of a manager, albeit a manager that’s put up the capital for the venture.

• Not all franchises have a happy ending. If the holding company folds, or has a policy change, you could be left out on a seriously precarious limb.

Please don’t assume that buying a franchise equates to an easy ride. Far from it, you will have to work just as hard as someone who starts from the ground up. A franchise is most definitely not a passport to easy riches and short working hours. If you are interested in franchising then contact the ‘British Franchise Association’ who can provide you with the ins and outs of the franchising world. Their number is 01491 578050 or log on at www.british-franchise.org Make sure you thoroughly investigate your short-listed franchisors, stick to those with a proven track record, who willingly allow you to contact their existing franchisees.

A final point on franchising. Do you really WANT someone to hold your hand and lead you all the way ? isn’t half the fun and satisfaction doing it yourself and creating your own business, rather than just following someone else’s lead ?