The success of Starbucks and McDonald’s shows how profitable franchising can be, but there are many other choices for the would-be franchisee.
If you’re eager to start a business but are unsure about your idea and are having trouble getting the bank on side, buying into a franchise model could be the best way to go.
A trusted name
The obvious advantage is that a franchise provides you with a tried and tested business and established brand recognition. Jo Tolley started a branch of infant swimming company Water Babies after having worked as one of their instructors.
‘I was thinking that I might set up a similar business of my own, but I liked this company and wanted to use their brand recognition – which I think is useful when people are spending less,’ she says.
Despite the fact that franchising takes away some of the usual pressures of setting up a business (for example product research), Tolley cautions against seeing it as an easy option. ‘However much time you think it’ll take up, double that,’ she says.
Tolley adds it’s also important to take your time to see the process through. ‘It took about eight months between first deciding to do it and then going through with it. We went to lots of seminars and met with the owners first. One of the main advantages for us has been the support involved.’
Sharing the load
Peter Ivens decided to turn his 22-year-old printing business into an online franchise through Netstationers because he also wanted the support of being in a network.
‘I’ve total control over how I run my business still, but have the advantage of not having to spend all my time worrying about invoice and credit control, warehousing and distribution,’ says Ivens. ‘I can now go after bigger and better contracts for the first time in a long while.’
He has also saved a lot of time and money in the process. ‘Now I’m able to go on holiday – working for myself wasn’t allowing for much time off. And in the process of moving online, I’ve also saved £80,000 by reducing my overheads.’
The right fit
Of course, being part of a franchise won’t be for everyone. Michael Evans, a partner at law firm Davenport Lyons , says that one of the most common reasons for a franchisee failing is because the owner isn’t suited to the arrangements. ‘You should think carefully and be quite searching about your own motivation. The legal obligations tend to be set in the terms of the franchisor. There tends to be very little wiggle room in terms of changing the contract, but there are advantages to having consistency in the running of the brand,’ he says.
Copyright 2010 Vitesse Media
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