How is a franchisor different from a boss?
Cathryn Hayes, HSBC Head of Franchising:
The relationship between an employee and employer is often very different to that of a franchisee and franchisor. An employer pays you a salary, sets your working hours, tells you how to do your job. If the focus of the business changes, an employer will send out instructions and employees will have to follow.

A franchisor is there for support and guidance - it is a different relationship, more 'grown up' in some ways. If things change, a rebrand, say, or new products, the franchisor needs to persuade and convince the franchisee to implement the changes. Franchisees cannot be told what to do in their own businesses. A franchisee is not an employee - he or she is an independent business owner - and woe betide the franchisor who tries to issue orders!

Do I need to know how to run a business?
David Paulson, FranMatch Executive
Many franchisors recognise the need to assist new franchisees in getting their business off the ground, and so create a training and support package which covers all areas of the business, often suitable for people who have never owned their own business before. This support is funded by the ongoing management service fee paid by franchisees.

Basic pre-launch support will cover putting together the business plan, right the way up to pre-agreeing funding packages with lenders. Site selection is another area in which franchisors can provide assistance, while telephone support is practically a given when it comes to franchisee support. Dedicated IT and operational support is usually offered for franchisees in more complicated sectors, while technical advice is essential for specialist areas.

As franchisees gain more experience they will require less constant advice and guidance from the franchisor, leading many franchisors to promise an intensive initial support system followed up by a more general programme for the more experienced network.

What types of businesses are franchising in the UK?
Roy Seaman, Franchise Development Services Managing Director
TheUKFranchiseDirectory.net identifies 13 sectors of franchising: Automotive; Business-to-Business; Cleaning & Maintenance; Delivery; Food & Drink; Health, Fitness & Beauty; Home Care; Leisure & Travel; Print & Design; Property Care; Real Estate; Retail & Fashion; and Sales & Distribution, plus Specialised to encompass the myriad of concepts that don't fit into these categories.

The types of franchises can be divided into categories: Job Franchises, where the franchisee operates the business hands-on; Sales & Distribution Franchises, where the franchisee is on the road, selling and/or distributing products in his territory; Executive Franchises, where the franchisee runs a one-man, white-collar business; Retail Franchises, where the franchisee invests in commercial property, staff and inventory to help operate a shop-unit; Investment Franchises, where the franchisee puts up the capital and appoints a manager to run the business; and Management Franchises, where the franchisee manages a team of operatives.

How can I determine if a franchise is ethically put together?
Cash Generator Managing Director Brian Lewis:
First of all, check whether the company is registered with the British Franchise Association (bfa), and ideally has attained full membership. To gain full membership accreditation from the bfa takes an amount of time and effort. This does not mean that companies at the provisional or associate level are not ethical franchises, but they will not have had the rigorous testing by the bfa that has to be undertaken in order to be awarded full membership.

Secondly, do all the necessary due diligence, in particular observing the accounts of the company, obtaining bank and trade references and making general observations of the people and company in question. You may need to have some accountancy or legal advice, but you are looking to see if there is anything in those accounts that casts doubt onto the viability and or integrity of the company.

Thirdly, it is always good practice to do a county court judgement check through a credit reference agency to make sure the company is not acquiring bad debts by non-payment of bills. Finally, it is critical that you speak to a number of existing franchisees and ask them if they know of any incidents that might put that integrity into question.

How much of the investment will I be required to produce?
Richard Holden, Lloyds TSB Head of Franchising
The amount of your investment will depend upon your chosen franchise opportunity. You maybe able to finance the investment from your own resources however if you need to borrow funds banks are the most common source of finance.

The level of finance available from a bank will depend upon the strength of the franchise system and your business plan. Generally most well-established franchise systems offer a tried and tested business model with initial training, ongoing support, brand recognition and the collective buying power benefits that a network of businesses can bring. There is evidence that franchised businesses tend to grow quicker and survive longer than new start up independents.

It is for these reasons that banks generally consider franchising as a less risky way of operating a business. You will need to raise as much as between 30 and 50 per cent of any setup costs from your own resources. While most banks will consider lending up to 70 per cent of the total costs including any working capital requirement for selected well established franchise systems, this is not an automatic option.

For newer, less established franchise opportunities it is likely that you may need to invest at least 40 to 50 per cent from your own funds. The importance of a good business plan can not be overstated. When considering the financial aspects of the business plan it is best to build in a contingency of at least six months' - and preferably 12 months' - expenditure in case the business takes longer than anticipated to get off the ground.

What is the potential to grow within a franchise system?
Nigel Toplis, Recognition Express Managing Director
I think it is fair to say that the growth potential of a business format franchise is limited only by the desire and ambition of the franchise owner. It is in everybody's interest but particularly that of the franchisor to encourage continual growth of the franchise unit not simply to enable a particular franchise owner to succeed but also to encourage new franchise owners into the system.

Successful franchising is dependent on repeatability and successful repeatability ensures development and growth of a business. It is incumbent on the franchisor to continually monitor and add to the tools, programmes, training and collateral provided to the franchise owner such that the implementation of same will bring about new growth.