The New Year is full of resolutions to change our lives, get fitter, be healthier and for some, to find a new career. If that sounds like you, franchising, one of the business world’s best-kept secrets might be an idea worth exploring.
What is franchising?
You know McDonalds, Subway, Dominos Pizzas, German Doner Kebab, Costa? (the list goes on..) well many of these are franchises (some are still run by head office).
The franchisee (you) operates an exact replica of the brand with full support and training from head office (the franchisor). In broad terms, you will pay an upfront fee to purchase the franchise then an ongoing monthly fee, back to the franchisor, which is usually a percentage of your profits. Franchising is a win, win for both sides. The franchisor expands their business rapidly with financial input from you and you get to run an established business with a proven track record and full support from head office. It works.
But not all franchises are multi-million-pound affairs. Franchises come in all shapes, sizes and costs, including children’s activities, home care, holidays and travel, cleaning services, automotives, beauty, pet care, you name it, there will be a franchise for it. Prices start at a few thousand pounds.
Is franchising safe and profitable?
According to our last annual survey[1], failure rates for franchises were very low with fewer than 1% per year closing due to commercial failure and 93% of franchisees, who had been running for five years or more, reporting that they were either ‘quite’ or ‘highly’ profitable.
5 Top Tips for Buying a Franchise Safely in 2024
To ensure you buy a franchise safely, follow our top tips and remember, if in doubt, we’re here to help.
- Firstly, we would recommend you visit the BFA website not only to fully understand the due diligence process to help you choose the right franchise, but also because our franchisor members have all chosen to adhere to high operating standards and ethical practices in franchising. They have all undergone our rigorous accreditation process to have their business models and opportunities reviewed and approved. It’s a great place to start! www.thebfa.org
- If possible, visit a franchise exhibition to get maximum exposure to multiple brands at the same time. This is a prime opportunity to meet with the franchisor face to face and ask some probing questions regarding profit, the market, and opportunities for growth.
- If you are interested in a brand, talk to as many existing franchisees as possible before making your decision and not just the ones the franchisor introduces you to. Ask how good the support is from the franchisor, how profitable the business is and how well does head office deal with enquiries or issues? If a brand is being badly run, the franchisees will be the first to tell you.
- Go on Discovery Days. Franchise brands run these so you can really experience what being a franchisee is like; you might even be able to spend a day with a franchisee which should help you decide if it’s the right one for you.
- If you do decide to purchase a franchise, we can not stress how important it is to only work with a specialist franchise solicitor before signing anything. We have a list of them on our website. Your regular solicitor won’t have the expertise to deal with franchise agreements and sometimes, if things go wrong, the only thing that stands between you and losing a lot of money is the strength of your legal documentation. Be careful.
Although still relatively unknown, franchising is a highly successful way of going into business, with a full support team behind you, working hard to ensure your success. All you need to do is work hard and follow the model. Good luck and we hope to hear from you in the New Year.
