Friday, 21 February 2014

Could Franchising Be The Right Route For You?

Starting a business is an exciting but challenging time and the reality is that over 50% of startups fail within their first year of trading. This can be down to a number of factors including employing a weak business model, poor marketing and a lack of capital.

In contrast, franchises tend to have a far higher success rate than new businesses because they already have a proven business model and a strong marketing plan with a powerful brand behind them. As a result, it's well worth at least finding out a bit more information about franchising and whether or not it could be the right route for you if are considering setting up you own business.

What is a franchise?

If you aren't already familiar with franchising, the idea is quite straightforward; essentially a company grants an individual the right to sell their goods and services in an area and trade under their name. Many high street chains aren't 100% corporately owned and choose to operate franchise models, so it's not something that hasn't been around for a while. Popular franchises include McDonalds, Subway and Cash Converters.

The benefits of starting a franchise

There are a number of benefits to setting up as a franchise, most of which will differ slightly in different models, but generally speaking there are a number of benefits to starting a franchise. Express Accountancy, one of the UK's leading accountancy franchises have come up with the following benefits that being a franchisee can present.

  • Raising finance can be easier - One of the toughest things about setting up you own can be raising the finance you need. You can find yourself being turned down by countless banks, even if you think that you have a full proof business model. Many franchisors have strong relationships with lenders and it can often be easier to obtain the required finance as you'll be operating under a proven business model.

  • Franchisor usually handles sales and marketing - Sales and Marketing isn't the easiest thing as a startup, in fact, a lack of any real strategy in this area is a big reason why so many businesses tend to fail in the early stages. However, as a franchise owner, your franchisor will often take care of a lot of this. Say for example you choose to operate an accountancy franchise, the franchisor is likely to have established some successful lead generation channels already and you will benefit from this.

  • A proven business model - Successful and sustainable business models can take years to fine tune and as a startup, you'll need to learn from your mistakes quickly to ensure that you are operating the right model. As a franchise, you'll already be part of a model that has been tried and tested, which means that you can focus more on the day to day running of your business and making it a success, rather than constantly tweaking with operations and processes.

  • Franchisors will help and guide you - It's in the best interests of the franchisor for you to make a success of your franchise and many franchise models include training and unlimited support. Let's go back to that accountancy model, you could be the world's greatest accountant but have no experience of running a business whatsoever, well this is where the franchisor can help. Usually they'll offer training to prepare you for managing your business and if you need any help or guidance along the way they should have support systems in place. You aren't on your own!

Starting your own franchise

The process of starting your own franchise will vary greatly according to which franchise model you decide to adopt. Each franchisor will have different process and expectations of potential franchisees, so make sure you read through the franchisor's prospectus and website to get a better idea of the process from start to finish.

As was mentioned earlier, in terms of raising the finance required for your initial franchise fee and any other costs that need to be covered, make sure that you speak to your franchisor as they may have good relationships with certain lenders if you are struggling to raise the finance yourself.

Is franchising the right route for me?

Only you can answer this question, the facts are there, you get more support with a franchise and they have a higher success rate. However, maybe you are someone who is fascinated by building up a brand and really going it alone. Sit down, weigh up the pros and cons of both and take those initial steps to being your own boss.

Did you find this article helpful? Do you run a franchise business? Please let me know by leaving me your valued comments.

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1 comment:

  1. Actually I've learned a lot through reading this post!! Franchising is a complicated art and I think researching is the only way to make is simple to me. Thanks for the handy ideas.


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