Does Franchising Get The Recognition It Deserves?

10/04/2018 17:20 | Start a business

Does franchising get the recognition it deserves

As a business model, franchising is well-known for offering a route into ownership that is less risky and provides more support than any independent alternative could. This makes the franchise model very appealing for budding entrepreneurs who have little or no experience of running a business. Being able to follow a model and receive advice and guidance from a knowledgeable and accomplished franchisor can give many would-be business owners the confidence to become the boss.

So, why is it that franchising doesnt always get the recognition it deserves in the UK? Despite the fact that the franchising industry is continually growing, the concept seems to be an afterthought for many entrepreneurs looking to start their own venture.

Here are five great reasons why the number of successful franchises in the UK is on the increase and why franchising should get the credit its worthy of.

1. It's recession proof.

The British Franchise Association / NatWest Franchise Survey 2015, reported that the franchise industry contributes £15.1 billion to the UK economy. A whopping 46% increase from 2005. And the total number of people employed in UK franchising has risen at an even faster rate. With 365,000 people employed in 2005 compared to 621,000 in 2015. An unbelievable 70% increase in a decade.

The franchise industry is continuing to thrive and has survived several periods of economic uncertainty. Even with the current situation of Brexit, franchising is likely to remain relatively unaffected. It should be noted that the majority of franchise agreements are governed by UK contract laws which are unlikely to be amended as part of the exit negotiation process, or indeed by the UK government.

2. It's tried and tested.

When many people think of entrepreneurs, their minds often conjure up images of inventors or innovators. But sometimes the most successful entrepreneurs are the ones that dont feel the need to reinvent the wheel, but those who follow a proven franchise model.

Even though franchising is one of the safest ways for inexperienced business owners to venture out on their own, there doesnt seem to be as much recognition given to franchisees in comparison to independent business owners. The focus always seems to be starting from scratch as opposed to taking advantage of a tried and tested franchise system.

There appears to be little awareness of the number of successful franchises that exist on our high street by people outside of the franchise industry. Brands that are visited every day such as McDonalds, Costa Coffee and Subway are overlooked by many people looking to start their own business because they are unaware of the ability to be able to buy into a franchise business.

3. Reduction of risk

Starting any business is risky, but despite franchising not being completely risk-free, it certainly offers a safer route to business ownership. However, there are so many uncertainties when starting a business from scratch which can be mitigated by buying a franchise.

The fact that youre investing in an existing proven business model, youre able to obtain financial figures from the franchisor. These projections enable you to have a more accurate understanding of how your new business is going to perform. For this reason, banks view franchising as a much safer way to start a business meaning that obtaining funds for a franchise is much more straightforward than for other business ventures.

4. Greater variety

The world of franchising has changed significantly in recent times. The industry was known for famous brands which dominated the fast food sector, but with large franchises such as KFC, Wimpy and Pizza Hut being out of many peoples reach financially, the franchise options were somewhat limited.

Today though the franchise landscape looks very different. With over 900 active franchise systems in the UK, there is a business type and size suitable for all prospective franchisees. Gone are the days where the focus of franchises up and down the county was in the design, development and distribution of products. Now the service sector is equally as popular for would-be investors.

Now franchise options include part-time opportunities, as well as many brands offering the chance to be van-based or to work from home. In fact, of the 44,000 franchisee-owned businesses in the country, over one-third are run from home. All of this additional choice makes franchising appealing to a much larger market, giving franchisees the opportunity to invest in an industry they're passionate about, a critical factor in the success of any business.

5. Increased chance of success

There are differing views about the success of franchises compared to run businesses independently, but with 97% of franchisees reporting profitability and more than 50% turning over more than £250,000 a year, the figures from the British Franchise Association speak for themselves.

As the franchise model evolves and develops, the relationships between franchisors and franchisees seem to be growing too. A massive 91% of franchisees state that theyre satisfied with the relationship they have with their franchisor. Could this be the reason that franchisee failure rates were cited as less than 1% in 2015?

Theres no denying that the training that franchisees receive when they invest in a franchise stands them in good stead for becoming a successful business owner. Whereas an independent business owner must learn through trial and error or pay expensive fees to professionals for advice and guidance, successful franchises can share the secrets of their achievements.

So, despite the lack of attention it receives, why are franchise options starting to become more viable for would be entrepreneurs? It comes down to the fundamental benefits of franchising its resilient, proven, is less risky, comes with increased variety and you have more chance of succeeding. As long as you do your research and consult franchise professionals before you sign on the dotted line, investing in a franchise could be the right choice for you. And pretty soon, more people will realise the same and franchising will eventually receive the recognition it so deserves.

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