How to start a franchise in the UK?

The idea of running a business with the backing of a successful and strong brand is the perfect way to start being the boss. But, as with any business, there are steps that need to be taken when becoming a franchisee. So, how do you start a franchise?

5 top tips to start your franchise

Well, here’s 5 top tips to get you on the road to franchise ownership:

1. Do your research. Firstly, speak to other franchise owners to see if this is the right move for you. If you’re strong willed and don’t take direction easily, then building a business which is ultimately overseen by the franchisor may not be a great fit. It’s a good idea to meet people with franchise experience and view lots of business opportunities and you can do this at an organised franchise event. The British Franchise Exhibition, Franchise Opportunities Live or the National Franchise Exhibition are run annually around the country. Visit the British Franchise Association for details of upcoming events. When you’re happy that the franchise business model suits your ambition, then you’ll need to research different sizes of franchises to make certain that the opportunities match your budget.
   

2. Make discovery days count. This is the name of the meeting between you and your potential franchisor. It usually takes place at the company’s headquarters and it’s a chance for you to experience the brand, culture and people involved in the business. First impressions count, so it’s important to trust your gut before entering into a franchise agreement. Prepare questions to ask and be ready to get into the details of the agreement. Find out how much support the franchisor will provide while you’re setting up your business with elements such as recruitment and training.
   
   
3. Choose your location. If you’re getting all the right vibes after discovery day then it’s time to get down to business and choose the ultimate location for your new business. For some businesses location will be more important than others. For restaurants and shops, for example, footfall is the difference between the success or failure of a business. Most franchisors will help you find a suitable site. If you choose a location on your own, then this will need approval from the franchisor.
   
   
4. Secure funding. Having a robust business plan will ensure you know exactly how much money you need to start franchising. If you need to apply for a bank loan to raise the capital, the same business plan will help you prove the viability of the franchise opportunity. Some banks specialise in franchising and will give advice if any additional funding is needed.
   
   
5. Speak to the experts. When you’ve met your franchisor, chosen the location of your business and secured funding, and you’re about to sign on the dotted line – STOP. Before you commit, make an appointment to see a specialist franchise solicitor who knows the intricacies of how to start a franchise. A franchise agreement can be an intimidating document so having an expert to help you make sure that it meets the British Franchise Association Code of Ethics is a must.
   
   

There are however, fees and initial set up costs involved in franchise relationships that don’t exist when starting a new business, such as regular fixed costs to use the brand name. And these costs rise as the size of the franchise opportunity increases. Low cost business opportunities often do not need fixed premises, allowing the option to work from home. This flexibility opens franchising up to parents wishing to work around their children, school hours and caring responsibilities, as well as those looking for a part time income rather than full time.

These steps are not that dissimilar to the stages involved in setting up any business. So, what are the advantages of starting a franchise versus buying a business? The number one reason is the significantly higher success rate of franchise businesses compared to start ups. An indication of this is that ownership changes in franchisee businesses are low (4.6%), with failure rates much lower than for other small businesses generally. The winning formula seems to be because franchise businesses following a proven model with brand awareness and support from day one. Although start up owners can bring creativity and individualism to their new businesses, this often comes with the cost of an increased likelihood of failure.

Advantages of franchising

So, buying a UK franchise does not necessary mean working 9-5, 5 days a week; there are also part-time franchises available with many having the option to go full-time as the business expands. Buying a part-time franchise opportunity may also mean that the investment is lower. There are many part-time franchises available across a range of industries including vending franchises, cleaning franchise opportunities, children’s franchises, car valeting franchises, recruitment opportunities, pet services, jewellery franchises, fitness franchises, delivery franchises…to name a few.

• You don’t need any business ownership experience to run a franchise.
• You’ll get support and training from the franchisor.
• The franchise will offer you an established reputation, brand and business model.
• These proven business elements may make it easier to secure funding for your venture.
• You’re more likely to succeed in business compared to a startup.

Of course, you’ll need to be aware of the disadvantages too. These include:

• You’ll need to adhere to a franchise agreement which can limit the creativity you can bring to the business.
• You are often restricted on the products you sell and where you can sell them.
• You’ll pay ongoing profit share to the franchisor.
  

Also, buying a franchise isn’t a promise of success. The same sacrifices that need to be made when running any business still apply. Good decision-making, hard work and serving your customers well are the only guaranteed ingredients for a winning business.