Franchising 101: 8 Reasons Why You Should Franchise Your Business

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Franchise your business

Franchising can be a fantastic way to grow a business. But perhaps you’re in two minds about whether it’s the right expansion method for you? If you’re not already familiar with the reasons why you should franchise your business, this is the article for you. Below we list our top eight.

Franchising is a popular business model, employing over 710,000 people in the UK – and the number of people in the sector has risen over the past few years. This is unsurprising, given that 97 percent of franchise units run in profitability and just 4.6 percent experience changes in ownership (The British Franchise Association / NatWest Franchise Survey 2018). 20 years ago, the franchising industry contributed £5 billion to our economy. It now contributes three times that amount!

Expanding through franchising presents many benefits for your business. Franchisees invest capital and take on the day-to-day running of franchise units, while you enforce brand consistency across the network and gain a share of the profits. Let’s now take a more in-depth look at why you should consider franchising your business.

Top 8 reasons why you should franchise your business

1. More recession-proof

It’s impossible for any industry to be completely recession-proof, but businesses that have adopted the franchise model have been found to survive a recession better than those that haven’t. This could be because franchisors aren’t usually subject to as high levels of overheads and debts as non-franchised business owners. Also, during difficult periods, franchisees should work incredibly hard to stop their business from flopping.

2. Expand network rapidly

Franchising is a quick way of growing your network to numerous locations. The franchisee will provide the financial backing and motivation to drive your business concept in a particular area. You’ll have few costs because the franchise fee includes all of the equipment and set-up costs and it is paid by the franchisee.

3. Cost-effective

Franchisees make an initial payment and then pay you a percentage of their revenue to be able to operate under your brand. Therefore, the costs of setting up the business are covered by the franchisee. Once their franchise has launched and become successful, they will reward you with a monthly income. This makes the franchise system an incredibly cost-effective route to develop your business into new territories. However, this only works well when the business is already thriving and you are prepared to put time and money into developing an attractive franchise opportunity.

4. Increased purchasing power

Central to franchising is franchisees being able to replicate a clear business concept successfully. As long as you put a sufficient amount of cash into marketing at a national level, the brand should be able to expand quickly nationwide. This will stimulate an increase in the volume of sales and, as a result, purchasing power. This means great things for the type of discounts that you can expect from suppliers.

5. Can penetrate the market easier

Franchisees will often be known in the community, either on a personal level or due to previous business ventures. This means that they should be able to entice new customers to visit more easily. Being established in the community, living in the franchise territory and proving to citizens that they have made a commitment to the success of the franchise should all encourage better market penetration.

6. Less work for you on a day-to-day basis

The daily running of the franchise is the responsibility of the franchisee, which provides you with more time to focus on the development and growth of your business. For instance, it is normally the franchisee’s responsibility to hire staff and manage any issues that arise. Of course, a good franchisor will provide its franchisees with the necessary training and ongoing support, and be on hand if they have any questions. But not having to run everything by yourself takes away much of the stress and hassle.

7. Don’t have to recruit as often

When entrepreneurs make the decision to join your franchise, they will generally be choosing to stick with your brand for the long term. If they change their mind and decide to leave the business prematurely, they might not have received an adequate return on their investment and could even lose everything. This generally means that they won’t choose to become franchisees until they are 100 percent sure that they’re ready and dedicated to making it a success.

If franchisees have realised the full potential of their franchise investment and it is the right time to sell, it’s usually their responsibility to find a suitable buyer. So, you won’t have to commit to the often-time-consuming task of re-recruiting owners for your franchise units.

Franchisees are also responsible for recruiting their own staff, so you don’t have to spend your own time or resources on this.

8. Potential to grow overseas

It may seem a long way off now, but if you expand your business through the franchise model successfully in the UK, you could decide to use the master franchising system internationally. This is a relatively straightforward and quick way to expand into other countries, as the master franchisee can adapt your UK franchise model to suit the local market. The three main areas that might differ are the language, legal requirements and business customs.

Use franchising to take your business to new heights

By now, you should have a clearer idea of why you should franchise your business. But this doesn’t mean that franchising is the right decision for everyone. Before rushing into things and having regrets further down the line, it’s important to make sure you’re ready. Another article in our ‘Franchising 101’ series should help you make this decision.

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