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If you want to start your own business, franchising has a lot going for it. Franchising isn’t a business in itself, but rather the method of buying a franchise or business; in other words, ‘buying into’ a brand and format devised by someone else.
Franchising has the big advantage that you aren’t starting from scratch. In exchange for a fee (or fees), you get the right to trade under the franchisor’s brand name.
You also get a ready-made (and hopefully proven) business plan, along with training, materials, assistance with marketing, and access to advice and support any time you need it.
A huge range of franchises are available and there’s something to suit most budgets. At the bottom end of the scale, you can get started as an Avon distributor for as little as £30. At the other end, you could pay up to £1 million to purchase a McDonald’s franchise.
In between these is a huge range of businesses, from carpet cleaning to recruitment, gardening to children’s entertainment. While some franchises require business premises, many others can be run from home and/or a car or van.
Of course, some franchises are better than others, and it’s essential to research any that interest you carefully. So in this article I’ll be sharing some tips on choosing the best franchise for you and getting the most from it.
Pros and cons of buying a franchise
As I said above, the main attraction of franchising is that you’re buying into a ready-made business format. While that doesn’t guarantee the success of your business, with a good franchise you’ll be getting a format that has worked well for others, and with a little luck (and some hard graft) should work for you too.
Another benefit is that, as a franchisee, you’re not alone. If you have any problems or queries, the franchisor will be available to advise and support you. They will also in most cases provide training, promotional materials, and so on. You may also be able to network with franchisees in other areas for mutual support.
On the downside, running a franchise will require you to follow the franchisor’s format closely. If you’re a free spirit who likes to carve their own path, you may find this uncomfortably restrictive.
The other drawback is, of course, you have to pay the franchisor! Typically there will be an up-front fee and further regular payments. With a good franchise you get plenty back for your money, but ultimately all these costs have to be covered by you and your business.
Choosing your franchise
A good place to start your search is a franchise exhibition.
These events give you the chance to research many different franchises and – just as important – chat with the franchisors. Obviously, the pandemic meant many exhibitions were cancelled, but as normal life resumes they are returning to the calendar again.
The biggest exhibitions are those supported by the British Franchise Association in cities including London, Birmingham, Manchester and Glasgow. Entry is generally free as long as you register in advance. A useful resource to find out about upcoming exhibitions (and much more) is the website https://www.franchiseinfo.co.uk.
Here are a few more tips for you when buying a franchise …
- Choose something that interests you personally. You’re more likely to succeed in a business you enjoy, as you will put more effort and enthusiasm into it.
- Look for a franchise with a good track record and reputation. Be wary of new franchises, especially those based around an unproven product or service. Remember that the franchise is going to have to provide your livelihood, potentially for many years to come. You don’t want to hitch your wagon to a business that may prove no more than a passing fad.
- Once you’ve identified some franchises that interest you, ask the franchisors for contact details of existing franchisees you can speak to. Choose a few at random to contact. Ask them in particular what the quality of support from the franchisor has been.
- If possible, arrange to visit some franchisees. Stay a few hours to see what the work involves and whether you would enjoy it. This can be quite illuminating.
- Ensure the financials stack up. Study the projections provided by the franchisor and see if they tally with your own research, bearing in mind local market conditions. If the projected revenues look too good to be true, they probably are!
- Also bear in mind that start-up costs will need to be deducted from revenues, so don’t leave yourself short. It may be 6–12 months until your business is fully established. During that time, you will still need enough money to cover all your personal outgoings.
Before going ahead, draw up a detailed business plan. This should cover such things as the size of your territory, local competition, the economic climate (local/national), trends affecting the business, and so on. It should also include a cash-flow projection showing anticipated monthly income and expenditure for at least twelve months.
Your business plan will be an invaluable guide when planning and running your business. It will also be a necessity if you have to apply to a bank for finance.
Running your franchise
Here are some tips for starting and running a successful franchise.
- Keep in touch with your franchisor and act on any advice they give you. Whatever issues you may be facing, you can guarantee that someone, somewhere has already faced something similar. The franchisor will be able to advise you how they dealt with it.
- Improve your business skills and knowledge. While franchisors will teach you their system, most also expect you to bring some basic business skills to the table. If you can’t do simple bookkeeping or read a spreadsheet, for example, you may struggle. Consider taking courses to improve your skills.
- Likewise, aim to learn everything there is to know about your industry. Almost every sector has associations and meetings where business-owners gather and share ideas and experiences. As mentioned earlier, your fellow franchisees can provide invaluable insights as well.
- Monitor cash flow carefully. Regularly compare the figures in your forecast with the reality and use this to make informed decisions about your business. It’s important not to under-estimate the working capital required to run a business day to day while it’s growing. Cash-flow problems can be mistaken for poor profitability, in the early months especially. Careful planning and monitoring will reveal how you are really doing and prevent nasty surprises.
- Market your business. Even with a franchisor’s name and system behind it, no business will sell itself. Use the passion you have for your product or service to talk to people face to face (and on social media). Enthusiasm is infectious and you will be more successful.
- Monitor the results of any marketing activity carefully, however. You don’t want to waste money in future if a campaign hasn’t proved profitable.
- Stay up to date with paperwork. Don’t leave it a month then attempt to do it all in a day. Not only does this become a depressing chore, but by the end of that day you’re more likely to be tired and make mistakes.
- Recognize your strengths and weaknesses and use them to your advantage. If you really are terrible at one aspect of your business, employ someone to do it for you. Your time will be better spent on aspects of the work you are good at.
- And finally, enjoy yourself. The chances are you decided to start a business because you wanted to enjoy your work more than you were previously. Yes, buying a franchise requires determination and tenacity, but don’t lose sight of why you started. Stay positive, enjoy the challenges, reward yourself for the achievements, and never lose your sense of humour!
Closing thoughts on buying a business
If you want to start your own business, buying a franchise is definitely something to consider.
Not only will you be getting a tried-and-tested format to follow, you will also have access to advice and support any time you need it. You will still need to put in some hard work, but your chances of success should be significantly enhanced compared with going it alone.
What’s more, there are thousands of different franchises available, in a wide range of industries, and at prices to suit all budgets.
Don’t rush into buying a franchise, therefore, but take the time to explore a range of options. And hopefully before long you will be running your own profitable franchise and enjoying the many benefits of being a successful business owner!
Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.
Nick Daws is a semi-retired freelance writer and editor. He is the author of over 30 non-fiction books, including Start Your Own Home-Based Business and The Internet for Writers. He lives in Burntwood, Staffordshire, where he has been running his personal finance blog at Poundsandsense.com for over seven years.