Check out before you pay out
When it comes to investing in a franchise, those in the retail sector are among the most popular as they include many opportunities that use an established high street name and a proven business system.
Becoming a franchise owner in the retail sector means you will have access to some of the biggest rewards available in the franchise industry but you need to remember that they often require a higher level of investment than many other business opportunities.
A retail franchise will require significant funding to cover commercial premises, shop fitting and employing staff to help operate a high-yield business system, which can often be sold at a profit, should the franchise owner wish to retire and capitalise on the investment.
Stuart Owens, Marketing Director at Cash Generator, explains: “Retail franchises tend to be the most successful as they offer potential franchise owners the backing and support of an established brand, combined with a high street presence and the ability to trade out of hours online.”
According to The British Retail Consortium, retail sales in the UK last year were more than £293 billion and accounted for more than a third of consumer spending.
As a result, a number of retail chains and franchises are becoming a growing presence in towns and cities across the UK, as successful stores decide that franchising provides the best way to meet their expansion plans.
However, Troy Tappenden, Managing Director of Dream Doors, warns: “A retail franchise is very different from those that are home or van-based. Typically the start-up costs will be much higher, and there will be immediate fixed costs to consider. Once established though, the returns should reflect that initial investment.
“Top Dream Doors showrooms turn over more than £600,000 each year, and a husband and wife team can take more than £100,000 between them. A retail franchise owner will need to employ and manage staff, and be able to deal with the challenges this can bring.
“Potential investors should also look at the brand and the product or services it offers. They should consider where it is positioned in the marketplace and what makes that particular business special.”
Choosing your perfect retail franchise
The best way to decide what kind of retail franchise you want to invest in is to consider two factors: what your interests are and where your expertise lies.
If you are interested in and have a love of technology and video games, you may wish to look at becoming a CeX franchise owner. Alternatively, if you have previously worked in interior design, you may want to invest in a showroom-based franchise.
However, previous experience is not usually a prerequisite to owning a franchise, as the franchisor will provide you with all the training and tools you will need to launch and run a successful business.
What will work to your advantage is that you have some interest in your chosen sector. After all, you will be devoting not just money but also your time to making your business a success, so you will want to make sure you will also enjoy it.
Buy and sell
Everyone likes to bag a bargain, so Buy and Sell franchise opportunities provide the shop with a number of revenue streams including selling new products, as well as buying good quality used products from the public and selling them on.
Stuart Owens, of Cash Generator, explains: “Discount retail is a growing trend in the UK as savvy consumers continue to search for fair deals, purchasing new and nearly new products. The latest Mintel research shows that as many as one-in-four adults are embracing a thriftier way of living, with 12 per cent of Brits shopping more frequently for bargains at second-hand outlets.”
With the housing market in a state of flux at present, people have been veering increasingly towards improving their homes, or carrying out much-needed repairs.
Troy Tappenden, of Dream Doors, explains that a franchise owner should ensure the business opportunity they are looking at has a unique selling point.
“Dream Doors has differentiated itself from kitchen companies by offering a time and cost saving alternative to traditional kitchens,” says Troy. “We have positioned ourselves among the market leaders in this sector by having a network of franchised showrooms, whereas our competitors are typically web-based, or will send agents with aggressive sale pitches from corporate head quarters.”
Clothing stores are some of the most popular in the retail market, providing a significant portion of retail revenue. There are opportunities to open shops specialising in outdoor wear, women’s, men’s and children’s clothing.
Retail franchises such as Rohan and Esprit continue to thrive because people prefer to try before they buy clothing.
“Our move into franchising signalled a new focus at Rohan on developing and improving our retail operations,” explains Ian Palmer, Retail Director at Rohan. “Our franchise opportunity benefits from our extensive merchandising operation, which restocks sold items within 48 hours and provides the franchise owner with a retail proposition in which no capital is tied up in stock.”
Tools and equipment
Utilising van-based showrooms, retail franchises like Mac Tools and Snap-On Tools sell tools and equipment for professional use. They are able to showcase and sell tools for the motor industry or the home repair industry via their mobile showrooms.
Beauty and male grooming
A beauty or male grooming retail shop can range from a store that sells beauty products to a hair salon. These retail franchises, such as Taylor of Old Bond Street and Glamour Secrets, provide great brand name recognition, and offer an opportunity to capitalise on products that women and men are inclined to buy, regardless of the economy.
These franchises often provide merchandise such as greeting cards and other small gift products to retailers who then sell them. Greeting card retail franchises, such as Cards For You, are popular home-based opportunity that allows you to work closely with retailers and sell a quality product while not having to run a retail outlet yourself.
Many of the major mobile phone network providers, such as O2, Orange and T-Mobile are finding that franchising is the way to penetrate the retail sector even further.
With telecommunications constantly changing, these business opportunities mean there will always be a constant stream of customers.
Many food-related businesses, including takeaways, confectionary specialists like Thorntons, coffee shops and packaged food retailers have retail locations. These can often be management franchises and require a lot of time dedicated to managing staff and, as well as marketing, stock control and cash handling. As a result, food retail franchises are among the least flexible franchises also the most secure and proven business system.
There are many retail franchise opportunities available for office products, such as mailing supplies, computer supplies and various paper supplies. These retail locations allow consumers or businesses to buy important business supplies immediately.
Reported by Fraser McKay