Main Menu

Get Into Franchising

If you’re interested in starting up your own business, you will already know that it carries significant financial risk. Franchising might be the answer you’re looking for.

Franchising

Setting up a business might sound like your ideal gig. You get to choose how the business is run and all that goes with that, right down to giving yourself the occasional afternoon off. Sadly, the reality is somewhat different and the statistics suggest that it’s a very risky thing to do, even if your pour your heart and soul into it – and many do, along with significant amounts of money.

Fortunately there is a different way: Franchising.

The idea is simple. Take a brand that is already well-known and successful and run your own small part of it. Lots of high street shops and businesses from burger restaurants and coffee shops through to estate agencies are, in fact, franchises.

The essential deal is that you pay for a licence to use the trading name, insignia and ultimately, reputation and in return, the ‘brand’ as it were, gives you access to training and a head-start in the marketplace. For its part, the brand claims a share of the profits.

Service-leavers

Recruiters often tell Civvy Street that the attributes they most admire about Service-leavers are fairly simple and straightforward. After a decent length of Service they know that on the whole they’ll be reliable, cool under pressure and able to follow instructions.

Although as a franchisee you’ll be ‘in charge’ of your own branch of the overall franchised business, the brand will be able to give you invaluable instruction towards making your business a success. After all, the brand will have started out as a much smaller concern so it’s clear that they know what they’re doing.

Banks

Banks like lending money but they don’t like exposing their funds to risk. As a franchisor you’ll find that banks will be far more enthusiastic about lending to you if you’re backed by a franchised brand. This is simply because the comparable figures suggest that franchising is the ‘safer’ business model. The other attraction to banks is that they also understand the reputation that Service-leavers carry with them into the commercial world. They know full well that Service-leavers are best placed to carry out the sound advice of the franchisor and that their investment will be safe.

The British Franchise Association/NatWest Franchise Survey, now in its thirtieth year, is the most widely respected annual report of franchise trends. The 2015 survey shows that a record 97% of franchise-owned outlets reported profitability last year, with 56% saying they are ‘quite’ or ‘very’ profitable. This coincides with a low rate of commercial failure: just 1% of franchise businesses had to close their doors for this reason in 2015. 

Investing

The other main points about why franchisors are enthusiastic about Service-leavers are that even after a significant career in the Forces of say, 20 years or more where you’ll have picked up valuable skills and qualities, you’ll still be young and vigorous enough to cope with the demands of running a business. Furthermore, Service-leavers often emerge from the Forces with a decent lump sum that can become the basis of their franchising investment. In other words, Service-leavers can really ‘hit the ground running’.

Scale

Investment capital and franchising go hand-in-hand. You can literally buy into a business and enjoy the full returns of a well-known brand pretty much immediately. Franchising isn’t just about top-end concerns such as McDonalds’ hamburgers or Starbucks coffee, plenty of smaller concerns make ideal businesses. Service-leavers looking to start up a ‘one-man’ business can buy into a smaller franchise, perhaps based around the evergreen ‘man and a van’ concept for less than £15,000.

Clearly, you could invest that same money into your own vehicle and business but how long will it take you to gather customers and recoup your outlay?

Training

You may or may not have previous training in a commercial skill or academic qualifications. This is why franchisors carefully select who they allow to buy into a franchise. Whilst franchisees benefit from the brand name, the last thing the franchisor wants is for anyone to make a mess of their tiny portion of the overall business. If that were to happen, customers would soon avoid other branches of the brand locally and the all-important reputation could start to erode. It’s no surprise then to find that franchisors provide carefully constructed training that reflects the expectations and values of the brand you’re buying into.

Business formula

As previously mentioned, most franchises of note started on a much smaller scale. Through hard work and learning from mistakes, the original business owners have indeed managed to build something of an ‘empire’. That experience is gold to anyone else aiming to follow a similar trajectory towards success and so it’s sense to listen carefully to what’s said to you.

The franchisor would rather support you by sharing the business formula than see your business (and their share of the profits) flop. Similarly, there really is nothing new under the Sun and it’s altogether likely that any difficulties you’re having with running the business will have been dealt with many times before.

Hard work

Business is still hard work. You’ll note that even the biggest brands in the world still advertise (a lot). In other words, even when you’ve reached success, staying there takes further determination.

Even under the best banner, if your business is slack, it will fail. The luxury of a franchise is that you have a head-start and plenty of support to make sure that your efforts are channelled towards success.

Different industries

It isn’t just coffee. Franchising covers an extraordinary variety of different trades and business types from gardening, estate agency and homecare through to care maintenance, restaurant and retail opportunities.

Whilst you might want to base your franchise business on a particular skill you’ve already got experience of using, leaving the Services can mean a fresh beginning and doing something for yourself based on an entirely new idea, interest or passion.

Selecting the right franchise

If there is a word of caution about franchising it should be that not all franchises are created equal. The British Franchise Association (Bfa) exists to “help potential franchisees recognise the good franchises and the not-so-good, as well as to help businesses involved in franchising to secure their own position amongst the ‘good’”.

As with any other investment, there are risks and indeed, there are plenty of good-looking investments that turn out to be poor. Fortunately organisations such as the Bfa and indeed, business advisors will help you to make the most prudent franchise investment with the funds available to you.

www.thebfa.org