Buying & running a franchise
Franchising offers a very attractive route to be your own boss. The number of franchising formats have risen by 60% in the last 10 years. There are some 760 business ideas to choose from including famous names such as Domino's Pizza, Threshers, Action International Business Coaching and Molly Maid cleaners. There are more than 30,000 franchise units operating in the country - the franchising sector has a turnover of more than £10billion and employs 364,000 people. Why franchising?
- Beginning to run your own business, particularly if you haven't any previous experience, can be a risky undertaking.
- The benefits of franchising are that you buy into an 'off the shelf' business model. The company and product branding, processes, standards, product sourcing and so on, are already created for you, and training is usually part of the package.
- Actually, if no training is offered that could be your signal to back off, but you do also need to make sure that you are getting value for money. Learning to run the business operationally is one thing but what you also really need is advice and support on selling your business offering successfully.
- Buying into a franchise doesn't preclude you from using any of the other business support services that are offered by e.g. Business Link, so do make sure that you get all the advice and help you can, and do your due diligence thoroughly.
Does that mean that it's less work than setting up my own business from scratch?
- Even with all the pre-packaging, there is still a lot of work to be done to run a successful franchise and it means a lot of hard graft particularly at the beginning.
- If you want the opportunity to call your own shots, all the hard work is usually worth it. Some 92% of franchises are still going strong after 12 months which is significantly more than other entrepreneurial start-ups where a fifth fail in the first year.
- You can buy into the set-up but don't forget that you still need to run the business yourself - and that means being a bit of a jack of all trades and getting customers.
How much money do I need?
- Franchises vary in terms of their level of required investment and track record so shop around before you commit - on average you need around £44,000 to get started but you can start with as little as c£15K.
- The type of franchise your choose should reflect the lifestyle you want to build for yourself as well as create an attractive income stream.
- You must consult the services of an experienced Accountant or Legal Professional before you buy into a franchise.
- Most of the High Street banks have experienced advisers on this topic as they are very often the ones loaning the money to buy into them of course. They may lend you in the region of 70% of the total investment, which is a much higher proportion than they would consider for most start-ups.
- Don't forget that as well as your 'stake' money you will be required to find your working capital (i.e. money for stock, staff wages etc), and also be able to survive financially until your business yields adequate returns - check out the page on raising business capital.
Exit strategies
When you are only just thinking about buying into a franchise, it may seem odd to be talking about exit strategies.If your goal is to run the business, build it up and then sell it on, you must understand the options you have and create assets that another buyer would pay good money for.
Essential Resources
Good research is essential - make sure that you really do look thoroughly before you leap! Check out these sites to find out about the opportunities available to you, and make sure you visit one of the national exhibitions so you can shop around and get some ideas. Better yet, visit an existing outlet of the franchise you are interested in and see what it really entails. If it doesn't feel right, then it probably isn't the right choice for you. At least that way you can refine your choices and options further without committing to an expensive and burdensome mistake.
Good research is essential - make sure that you really do look thoroughly before you leap! Check out these sites to find out about the opportunities available to you, and make sure you visit one of the national exhibitions so you can shop around and get some ideas. Better yet, visit an existing outlet of the franchise you are interested in and see what it really entails. If it doesn't feel right, then it probably isn't the right choice for you. At least that way you can refine your choices and options further without committing to an expensive and burdensome mistake.
British-franchise.org The BFA should be your first stop when researching franchising. Independent in that it carries no franchising ads but it is sponsored by all the UK Retail Banks
Be the boss Comprehensive franchise information site
Start in business Information rich site on everything you need to research before making a decision to buy an existing business, a franchise, becoming an agent or re-seller or starting from scratch
FranAccounts - BFA affiliated specialists in franchise finance and accounting
Which Franchise? BFA affiliated site with comprehensive franchise information and a special section on franchising after redundancy .
Franchise Opportunities Franchise directory for the UK and Europe, featuring the best franchises for sale and a wealth of franchise articles to help you with choosing the right franchise
The Franchise Alliance run free courses to help you choose the right franchise at myfranchise.net
Franchise Opportunities
If you would like to promote your franchise opportunity here, please contact us at editor@newlifenetwork.co.uk.
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