WHAT IS FRANCHISING?
McDonald’s, Dyno-Rod, Kall Kwik, Burger King, Mango, Prontaprint,
O’Briens, Pizza Hut, Cash Generator, ChipsAway, Wimpy, The Body Shop,
Subway, KFC…
all high street and household names that have embraced franchising as
the ideal formula for rapid and successful business expansion
nationwide. Franchising has provided them with a network of
highly-motivated, self-financing branch offices and outlets achieving a
sustainable and manageable level of growth.
The attractions of franchising drew investors and entrepreneurs to
open some 1,200* new units last year – that’s over three a day. These
new businesses covered a range of industries, such as retail, business
coaching, quick service and traditional sit down restaurants, automotive
retouching, snack vending machine distribution, tax and accountancy
services, lawn care and commercial cleaning.
The chances are, 96% of these units will still be in operation in
five years – an unprecedented survival rate which is being achieved in
franchising because of the nature of the relationship between the
franchisor, owner of the established company, and franchisee, the owner
of the new franchised business.
This relationship could be described as a ‘business marriage’ which,
in return for an initial investment from the franchisee, provides
licensed rights to a business system that’s tried and tested, including
branding, management infrastructure and protection of the know-how
underlying the system. This professional arrangement sets out an agreed
territory for an agreed number of years on a renewable basis.
Because the franchisee is investing in a proven and developed
business concept, there is rarely a requirement for relative industry or
business management experience. Rather franchising is providing a route
into business ownership for thousands of people across the UK who dream
of breaking the chains of employment but still desire the security of
back-up from a larger organisation.
The franchise agreement provides for training in the operation of a
business and the implementation of the franchise concept. This is
followed by ongoing franchisor support in such activities as launching
the business, sourcing stock, marketing campaigns and attaining sales
contracts.
The franchisor maintains an interest in the franchisee’s business
through the collection of a management service fee - typically a small
percentage of the franchisee’s profits. This provides the incentive and
the funding for the franchisor to maintain network support initiatives
such as national marketing and product development, freeing the
franchisee to concentrate on building a successful business.
Remember that not all franchise systems are necessarily well thought
out or well tested. Membership of the British Franchise Association –
requiring the signing up to a charter for ethical franchising – is a
good indicator of an opportunity worthy of consideration but there is no
substitute for properly checking out and researching a franchise. The
first rule of investing in a franchise is ‘check before cheque’.
As long as the business is soundly designed, has a genuine market,
and all parties are committed and fair to each other, franchising
provides a superb format for re-training people to change their life
with their own business. Rather than suffering the insecurity of
employment or kicking your heels in redundancy, franchising represents a
route into securing a successful and profitable future for yourself, but
not by yourself.
 To investigate a range of franchise opportunities currently seeking
potential franchisees across the UK, visit
BeTheBoss. If you would like more general information
about franchising, we recommend starting at
www.franchise-group.com
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