18 October 2013

Simple guide to franchises

This guide outlines reasons why you might want to consider investing in a franchise or franchising out your own business if you have one.

Franchises offer a middle ground between running your own business and working for someone as an employee.

This means franchises can be an ideal opportunity for people who want the freedom of being their own boss, without the risk and hard work of having to set up their own company from scratch.

The best franchises should have clear benefits for both the franchisor and the franchisee.

Reasons to consider investing in a franchise

  • You don’t have to come up with a business idea
    One of the toughest challenges is coming up with a business which will work and be profitable. With franchises, the business is already up and running and the idea has been tried and tested in other areas. Of course, there are no guarantees that your franchise will be successful, but it is less of a risk. It is also a good option for someone who wants to work for themselves but hasn't had that ‘lightbulb’ moment identifying a gap in the market or an innovative new product.
  • There is a network of support
    Good franchisors will offer you lots of support and guidance to help you get up and running and make your start-up business a success. You will be given a framework to work within so you will not be going it alone.
  •  Low start-up costs
    You will be expected to pay certain fees and royalties but these will often be less than the cost of starting up your own business from scratch.
  • Benefits of a well-known name
    If you are buying a franchise in a well-known company which is based in many areas of the UK, marketing will be less challenging than if you are launching a start-up business which no one has heard of. The company may have a national website which directs customers to their local franchise. A well-recognised name will help you win new customers and give them confidence in your business.

Reasons to consider setting up a franchise

If you are an entrepreneur with a successful business that has the potential to be rolled out to other geographic areas, you may wish to speed up your business growth by becoming a franchisor.

  • Cheaper way of expanding your business
    Rolling out your company to other areas and setting up new branches or outlets costs a lot of money and takes a lot of hard work. Setting up franchises will bring in money and allow your brand to spread to other areas without having to do all the work yourself or employ a large network of staff.
  • Spread your message
    Franchises offer the chance to spread your company’s message quicker and further than you would be able to yourself. But you need to be careful to maintain the integrity of your brand. You are trusting other people to represent your company and its name so you need to have strict guidelines in place and monitor the activity of your franchisees.
  • Potential to grow quickly
    You will need to take time working out all the details before you franchise your company, but once you have got started, it offers the opportunity to expand rapidly. The only limit to your business growth is the time needed to recruit and train franchisees.