21 reasons why you should consider a franchise
Franchising has attracted some 34,000 people in the UK to invest in their future in self employment. Roy Seaman CFE offers 21 reasons why franchises offer an attractive business opportunity
1. Established brand value
Prior to launching a franchise, the franchisor has developed and established attractive and meaningful branding for the operation, and as the network of franchisees expands the national recognition of this brand grows. If you are entering into a mature franchisee network, you will benefit from the national name recognition the brand has built when it comes to your own marketing initiatives, while even new launch franchises have invested in professionally designed and intellectually protected branding to benefit its franchisees.
2. Accessing a proven system
Most franchises are launched based on an initial head office or pilot operation that has been trading for at least one year. This is essential in enabling the franchisor to solve the teething problems any new business faces. As a franchisee you will benefit from lessons learned by the franchisor during this period through ongoing advice and support.
3. Provision of a proven business plan
The franchisor will be able to provide a template business plan to assist in your own planning for your business, including projected performance figures based on those actually achieved by other established franchisees. While you will need to put together your own individually tailored plan based on your own local knowledge of your market, the franchisor's assistance will prove invaluable in producing an accurate proposal for your business success.
4. Offering a product or service in demand
The pilot operation not only developed the operating systems and procedures of the business - importantly it also established a proven demand for the product or service. This is important in not only analysing the risk of investing in a franchise, but also in presenting the business plan to your bank manager in order to obtain funding.
5. A low risk route into self employment
Franchising has traditionally a lower associated risk than starting up your own business independently. The proven nature of the business concept, combined with the training and support provided by the franchisor, lead to a lower level of failure. The 2007 NatWest/British Franchise Association UK Franchise Survey reveals that 93 per cent of franchisees reported profitability last year.
6. A legal agreement that is fair to both parties
Franchisors recognise that to create a lasting successful relationship with franchisees, the Franchise Agreement must foster a balance of interest between the two parties. While you should always have the agreement checked out by a franchise-experienced solicitor prior to signing, you should expect to be operating with the full ongoing back up of a franchisor who is provided a proper incentive
7. Professional initial training
All business format franchises provides comprehensive initial training to prepare you for launching and the ongoing operation of the business. You can enter into self-employment confident that you are well prepared to tackle the challenge ahead.
8. Established profit margins
Setting price levels to balance between competitiveness and profitability is a complicated process, often involving some trial and error, that can prolong the development period of your business before break even. The franchisor will be able to help you set the right pricing levels from day one to ensure you are not under or over quoting, maximising the profits your business generates.
9. Recommended professional advisers
Professional advisors such as accountants are increasingly tailoring their offerings to benefit franchise networks, and your franchisor will be able to recommend franchise-experienced advisors to help you get the best guidance in setting up and operating your business.
10. Recommended suppliers or direct supply
The franchisor will be able to offer assistance in sourcing the products and services you will require to operate your business, and in some cases will even act as your main supplier.
11. Ongoing training
Whether your initial training is one week or two months, you won't be expected to absorb everything immediately. Many franchisors stagger their initial training to help franchisees learn while they are 'on-the-job'. This commitment to ongoing training also enables established franchisees to benefit from improvements in the franchisor's training provision, and eases the introduction of new products or services to the business.
12. Continual support
Having the back up of a larger company is one of the main reasons cited by franchisees for the success of their business. Rather than searching for solutions on your own every time a difficulty arises, having a head office team to consult on the end of the phone will provide great reassurance.
13. Support from other franchisees
Franchisees benefit from the success of their fellow franchisees, either indirectly by the improved reputation of the brand or directly through referral business in their own areas. They are therefore incentivised to assist each other and there is often a good level of communication across a network. Franchisors often encourage this by hosting quarterly regional get-togethers, partnering franchisees for larger jobs and maintaining franchisee intranet sites. Some franchisors even establish mentor programmes, where more experienced franchisees provide practical advice and guidance to new launch franchisees.
14. Economies of scale
By joining a national network of franchisees you are becoming part of a large group of buyers with the ability to negotiate preferential prices from suppliers and generate other economies of scale, such as in delivery charges. You may even be able to secure exclusive access to a product or service.
15. Referral business
The standardised nature of a franchised business's product or service means that franchisees in other areas will be able to pass on recommendations and referrals from their clients to businesses in your territory. This is a powerful sales tool when marketing to businesses who may have offices already being serviced in other areas by franchisees in your network.
16. National contracts
As the franchise develops a countrywide presence, the franchisor will be able to market to large companies and win national business for its franchisees, providing your business with a regular stream of high value, repeat business.
17. Continual research and development by the Franchisors
The economies of scale derived from operating a national network of franchisees encourage the franchisor to invest in research and development to improve the product and service offering and compete on a national level. As a franchisee you will benefit from continual improvements to your business.
18. Social interaction with like minded people
Self employment can be lonely for people entering into the situation for the first time. Franchising is a much more social alternative with franchisees encouraged to interact at Annual Conventions, and you will become part of a network of people who have taken the same life decisions as yourself.
19. Build a business to the level that suits you
Whether you are seeking a 'job franchise' that will allow you to be your own boss and provide a comfortable income, or a 'business builder' opportunity with the potential to allow you to step back from the hands-on side and manage a team of employees, there are opportunities available. Most franchises allow established franchisees to invest in additional areas if they reach a point where they would like to increase the potential of their business, meaning you can buy into whatever size you are comfortable with.
20. Ownership of an appreciating asset
As the franchise industry has matured in the UK we have witnessed growth in the market for re-sales. Many prospective franchisees want to benefit from the training and support of a franchisor, but seek to purchase an existing franchisee's business in order to guarantee a customer base from day one. Other franchisees prefer to launch a franchise in a fresh territory, build it up to a manageable level and sell it on as an asset.
21. A business that is easier to sell
Franchisors now recognise that the re-sales process is an essential part of the development of a franchise network. Many offer assistance to franchisees seeking to sell on their business, and through the franchisor's own franchisee recruitment marketing potential buyers can be identified and processed at a pace much quicker than an independent business owner might be able to achieve.