Being Made Redundant? Franchising Could Be Your Next Step.
If you’ve recently been made redundant and are looking for a change, consider making a franchise investment so you can run your business under an established brand. In recent years, thousands of people across the UK have become a franchisee in order to take control of their income and become their own boss.
Why redundancy could be your first step to a lucrative franchise career
Each year, hundreds of thousands of people become redundant in the UK, many of whom move to franchising. Indeed, you'll find endless examples of testimonials of successful franchisees who have built profitable businesses and realised their business dreams after having been made redundant. That’s because the prospects of a steady income with an extended franchise contract can be far more appealing than working as an employee for another company, where there is always a risk that your employer may cut jobs and initiate redundancies. In contrast, a franchise business opportunity can provide you with far more long-term stability, as long as the franchisor’s business model is sustainable.
How to turn a challenging event into an opportunity
Being made redundant is one of the most difficult and stressful events in a person’s life; especially for those with a family to support and a mortgage to pay. However, it can also give you the motivation to try something new and channel your skills and experience to a different career path.
During the recession of the late 2000’s, many thousands of employees were made redundant as the country experienced its worst economic crisis for decades. However, at the peak of the recession in 2009, the UK's franchise sector still grew by £400 million compared with the previous year, as more people made the leap from redundancy to starting their own business. Even during this challenging period, many banks were still willing to lend to franchises, and 94% of franchisors expressed confidence about the future of their network. Therefore, this shows how resilient the UK franchise sector has been over the past ten years or so, as more people take advantage of the latest franchise business opportunity in their local area.
What franchisors look for – and why you could be the perfect candidate
Don't assume that a franchisor will think you were made redundant because of poor work performance. Many people can be selected for redundancy because they haven't been working at the company for very long, or because they volunteered for redundancy after having been given the opportunity to do so. A person can also become redundant because their job is no longer required. For example, an employer might decide to close an entire operation to reduce their costs, or a business could be forced to make cuts because of a significant legal dispute or fine that was not the employees' fault.
When screening candidates applying to become a franchisee, franchisors look for people with excellent business acumen and the ability to thrive in challenging times. Because many people who are made redundant often have years of experience, franchisors will see this is a valuable asset, especially if your job required a significant amount of project management and/or responsibility for budgeting.
Some franchisors will require candidates to have specialist qualifications and at least a few years of management experience, while others may just be looking for people who are highly motivated and have a strong work ethic. If you're not sure whether you're the right fit, you could even ask to volunteer at the franchise for a couple of days to see whether this could be your next big career move.
Bear in mind that if you do have relevant experience for the franchisor’s industry, you’ll stand a better chance of being selected for an interview. During the interview process, your franchisor will be keen to learn more about your work history, your reasons for applying to become a franchisee, and what your financial goals are. The recruitment procedure may also include assessments to measure your business and managerial skills, and the franchisor may require a minimum score for candidates to be awarded a franchise contract.
Using your redundancy payment to fund your new franchise
Many people who are made redundant after working at the same company for several years will be entitled to a substantial sum of money. This will comprise of statutory redundancy pay in addition to any payments that the employee may be entitled to as part of their employment contract.
You could consider putting part of your redundancy towards your franchise investment, which would mean you wouldn’t have to borrow as much capital to set up and finance the business. However, many franchisors recommend financing part of your franchise investment to reduce your risk, especially as they can often get preferential borrowing rates with UK banks.
The commitments required for a successful franchise
Because many franchise contracts last more than five years, franchisees need to make sure they’re comfortable committing to their business for the long term. In the early stages, you’ll need to invest a considerable amount of time and money into building the new franchise and establishing your brand in your territory. If you decide that you want to renew the franchise contract, make sure you understand the formal renewals process. For example, some franchisors impose a deadline for renewals, which should be stated in the agreement.
Consider a part-time, home-based or seasonal franchise.
Another significant advantage of franchising compared to working as an employee is that you don't necessarily have to commute to an office every day and work full time. Many small franchises can be operated on a part-time basis, while others can be run seasonally or from home. Online franchises like those in the IT or finance sectors can be very profitable, as all you need is a computer, internet access, and software. By working from home, you won’t have to pay expensive office rents, which are usually the biggest business expense for franchises.
Hopefully, all the above will prove useful if you’re considering a new franchise business opportunity.
The Editorial Team, Point Franchise ©
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