How to become involved in the £13.5 billion – franchise industry

As you read these pages, whether in print, online, or via our App, you will be amongst 100,000 people looking for a route to success in the franchising market. Worth a suggested £13.5 billion, it’s an area to consider


In the UK more than 500,000 people own and operate a franchise business achieving a higher income than they could otherwise achieve in employment. Those franchise owners operating famous brands like McDonald’s, Domino’s Pizza and new to the market, CeX, are probably destined to become franchise owner millionaires. Other brands that offer genuine business format franchises provide to their franchise owners the same opportunity of earning substantial incomes, particularly if they choose to open second and third locations, once the first ones are trading successfully.



What does success mean in franchising?

In franchising, success becomes easier since there are predetermined guidelines that all franchise owners are encouraged to follow to start with. Should the franchise owner, having made investments of time and money, decide to step outside the guidelines, the chances are that they will fail or find it very difficult to succeed. Success will also demand you setting your own personal goals. This is important for not only your business, but also your personal finance and other areas of your life.

Remember also that success is a journey and it is not a destination. Many people talk about success as though it can only happen in a number of year’s time. When you look back on your own life, you can probably identify the fact that you have already made significant progress and are in the eyes of the people you know as a successful person. So, to move from where you are today, to become even more successful, can probably best be obtained by owning and operating a franchise where you have genuine interest and passion. Once you have made the decision that you would like to own and operate a franchise, then it is important that you involve your family and seek reassurance from them that they will provide you with their full support.

Researching your ideal opportunity

The next task is to research the franchise sectors you feel most drawn to and create a short list of any franchise brands that you feel you could own, operate and develop to their full potential. Ask the companies for their prospectus by either calling or dropping an email, many also can be found online. However, those that are carefully evaluating, you will want to talk to you before they send a prospectus.

Evaluating the franchisor

By deciding to invest in owning and operating a franchise, you will be eliminating many of the risks. However, risks still exist and, most importantly, you need to be absolutely certain that the franchisor that you are considering sis in fact a genuine business format franchise, and that they have proven beyond doubt their ability to replicate their success with taking on board new franchise owners. In due course, you will be encouraged to meet with these franchise owners and to obtain confirmation from them first hand that they still have high regard to the franchisor and the franchise opportunity being presented.

A well-established franchise should provide all of the essential elements for a successful business; offering good business systems, products and services which have been thoroughly tested and proven to work for one franchise owner after another.

The first investment that you make relates to the franchise package that you will receive from the franchisor. Normally, this is extremely comprehensive and will cover around 21 key areas, ranging from the initial and ongoing training through to continual support once your franchise is operational. You will also be granted the rights to trade under their name and have immediate access to the operations and training manuals. Your initial training will be comprehensive and you should be in a position to start the business with enthusiasm and confidence, whether the training is for three weeks or three months. Normally, the longer the training, the better chances you will have of success.

However, bear in mind that you are committing to follow the franchisors’ entire business system and you will be signing a legal agreement to adhere to that system. Should you be in substantial breech, then you could lose your franchise. The success of your business depends on the franchisor’s business plan so that you can achieve the highest possible turnover and receive the financial rewards that are expected. It is also your responsibility to uphold the brand name and image of the franchise company and should you not do so, then you will be called forward and educated on the importance of adhering to the system.

Before you take up any franchise, you must spend time with both the franchisor and their existing franchise owners so that you fully understand their business rather than just what the franchisor is saying to you. When the Franchise Agreement is presented to you, you will need to ensure that this is sent to an experienced bfa franchise lawyer so that it can be examined carefully and it is strongly recommended that you obtain written legal advice from the solicitor. Franchisors tend not to amend any of the terms of the contract to suit you as a franchise owner since all of the franchise owners need to operate on the same agreement.

Your franchisor will advise you on the best way to fund any shortfall in investing in the franchise utilising any of the banks with franchise departments or independent resources. As a rule of thumb we recommend that you do not borrow any more than 50 per cent of the start-up costs, although some banks will offer you up to 70 per cent.

The best references for owning and operating a franchise will always come from existing franchise owners rather than what the franchisor is suggesting that you could achieve. You should therefore be prepared to spend a considerable amount of time talking with and visiting existing franchise owners, attending franchising events and researching as many franchising sources as possible. For example this magazine and our sister publication The UK Franchise Directory. Through research you will grasp a better understanding of what you’re looking for and what success means to you.

Written by Professor Roy Seaman