Franchising is one of the continuing success stories of the British business scene. The size of the UK franchise market is expected to double in the next four years and, according to the British Franchising Association, 92 percent of current franchisees’ businesses are currently making a profit.
However, not all franchises are the same and anyone considering taking on a franchise should research the details of the particular business very carefully before taking the plunge.
The purchase of a franchise will give a business person a rapid entry into an established business sector. Most franchises offer access to a strongly branded business with proven operational procedures and financial systems.
When choosing a franchise, it is important to find out what is included in the franchise package and what restrictions are placed on the franchisee.
Although some differences exist between franchises in different business sectors, many franchises follow a similar pattern. Normally, the franchisor contracts to provide the essentials that allow the franchisee to get their business up and running.
The following types of materials and services are usually provided:
raw materials and other supplies;
licence to use brand name;
In return, the franchisee will normally pay an initial set-up fee and then a percentage of sales or profits, on a regular basis, as the business develops.
Starting and developing a new business can be very hard and stressful in the early days. A reliable franchise operation allows an entrepreneur to avoid many of the difficulties associated with a business start-up. The franchisor will have researched the market sector, developed appropriate products, worked out product pricing, created brand imaging and put the required operational procedures and systems in place. This allows the franchisee to get on with the job of running and expanding the business much more rapidly than would otherwise have been possible.
If you take on a franchise, you are buying into a brand. For the franchisor, as owner of the brand, protection of the brand image is critical for the continuing success of the franchise. Therefore, the franchise agreement will lay down strict rules regarding what the franchisee can or cannot do with their franchise business. This can lead to major difficulties if the franchisor and franchisee disagree on the way that the franchise should be operated and developed, over time. To avoid problems in the future, potential franchisees should read the franchise contract very carefully and obtain specialist legal advice, before any documentation is signed.
Franchising continues to be popular and profitable in the UK;
becoming a franchisee potentially offers a fast track into a successful business venture;
maintaining a positive brand image is critical for the success of any franchise operation;
potential franchisees should make themselves aware of any restrictions associated with the franchise contract, in order to avoid problems in the future.