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Is franchising right for me?

Written by: Nick Strong

Article Overview: Franchise business offers a more secure route into self employment than going it alone. Over 90% of UK franchise owners run profitable businesses according to the British Franchise Association/Nat West National Franchise survey. By following the proven franchise model the local franchise owner can build his own successful business in the UK. Nick Strong of Select Your Franchise and Richard Holden of Lloyds TSB give insights to prospective franchise owners.

Is franchising right for me?

Franchising is becoming an ever more popular method of setting up and expanding a business and it is easy to see why. Franchising provides a proven format, name awareness, support and guidance. It can offer vast rewards and compared to starting your own business from scratch it can be a relatively safer route into self employment.

However, whilst it is a safer route into self employment, don’t underestimate the heavy toll that starting a business can take on your life. There are inevitably going to be lifestyle changes when you become your own boss, which could include working longer hours, added pressure, stress and financial uncertainty, particularly in the early years. Running your own business – whether it’s a franchise or not - requires self motivation and as rewarding as it can be, it will always be a challenge.

When considering whether franchising is the right option for you, one of the first decisions you need to make is what type of business you have an aptitude for and you will enjoy. Eliminating unsuitable opportunities is relatively easy as most people will know whether they wish to be an owner operator or manage a team. They should also have an understanding whether they wish to run a business from home, an office or a vehicle. Everybody will have a financial budget to operate within. Once the options are narrowed down to a handful of suitable opportunities these will require further in-depth investigation.

Investing in an established franchise will as far as possible reduce the inherent risks in setting up a new business. It is important to evaluate the strength of the brand and the long term viability of the franchise. Unproven systems that have not operated a successful pilot scheme carry a significantly greater risk to the investor. It is essential that you undertake thorough research on the franchisor and the franchise package before making a commitment to invest.

An established franchise will have a track record of success and possibly some failures. It is important to investigate why they have been successful and what lessons have been learned from the franchisees that have failed. Ask for a list of franchisees and take the time to speak to as many of them as you can. The franchisor should provide this information willingly once they establish you are genuinely interested in their franchise opportunity. It is likely that they will want to manage the process but don’t be directed to only speak to the people the franchisor wants you to and who are likely to provide the most favourable responses to your questions. You should choose which franchisees to contact, talk to more than one and get a balanced view.

Not everyone is cut out to run a franchise, so the trick is to think things through carefully, get professional advice and - when you explore your options, don’t leave any stone unturned.

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Article Tags: aptitude, business from home, depth investigation, financial budget, financial uncertainty, franchise package, franchisor, handful, lifestyle changes, owner operator, pilot scheme, rewards, running your own business, self employment, self motivation, setting up a new business, starting your own business, suitable opportunities, support and guidance, term viability



Related Forum Posts
Any franchising horror story? - I am always writing about the benefits of franchising in this forum. Although I don't own a franchise I do believe in franchising is a great business model. Do any of you have horror stories to share about franchising?
Re: STARBUCK - Licensing vs Joint venture - [quote="bmueller47":czemqiul]I often come here to learn something, therefore I would like to know what is the real practical difference between licensing and franchising. I might have an answer, but you are at the forefront with your knowledge.[/quote:czemqiul] Very good question. Although I am not an attorney, I will do my best to highlight what I believe are the main differences between franchising and licensing. First, here in the US, franchising is very regulated buy the Federal Trade Commission. Not anyone can franchise, you have to go through various steps. Licensing doesn't come with as much regulation. The franchisee can expect to have a very close relationship with his franchisor. In most cases, the franchisor will offer training, and on-going support. The franchisee will be able to use the franchisor's copyrights, trademarks, logo and so on. The franchisee is like the public face of the franchisor. This is I think the high value of franchising. Also, a franchise agreement will most likely define territories. The relationship between the licensee and the licensing company is much looser. In most cases, the licensee won't be able to retain the rights to trademarks, company name, etc and will have to establish his own identity in the marketplace. Licensees rarely get a protected territory which means you next door neighbor could be your competitor... Obviously, franchising is more expensive than licensing because you get a certain "safety". Again, franchising is highly regulated whereas licensing is not. There are many other differences between franchising and licensing but I think these are the main ones.
Franchising is not a "no-cost" expansion model - Don's point above was right, and, if he only lost $5,000 getting into franchising, he got off very cheap. Getting into franchising is a serious business. We estimate that you need [u:32pu99ec]at least [/u:32pu99ec] $50,000 to do it right -- and it can cost five times that much for an aggressive expansion plan. Jim was right on. If you choose to franchise, you are getting into a new business -- the business of selling and servicing franchises. Mark
Re: Welcome New Moderators in Addition to Our Fine Team! - Hi Folks, My specialty is franchising. I have sold franchises for a living for quite some time. (I even sold one to a relative!!) I currently own a franchise consulting company. We match people up with the franchise that fits the business model they are looking for. Hope to contribute to the forums here. If anyone has questions about franchising let me know. I like helping others. Talk soon, John .
Is The E-Myth The Ultimate Franchise Guide? - Ever since the E-Myth made its way through to becoming one of the most popular books for entrepreneurs, the number of small business owners who have come to me discussing franchising has exploded. Is the E-Myth the reason why so many companies are now looking at franchising their business model? Are there any other resources you can suggest for new franchise owners or people considering it as an option?


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