What is a franchise and is it right for you?

Outlining the basic principles of a franchise business model, and whether it could be the right fit for you

Franchising, or more specifically, ‘business format franchising’  is something of a ‘secret world’ and many people engage daily with various franchised businesses without realising it.  It’s not because it’s a bad thing, but simply that on the client or customer facing front of the business, many organiaations won’t be promoting that their brand is a network of ‘owner-operated’ businesses rather that a single corporation run by employees.

A partnership of interdependence

A franchise can be defined as a unique business model that allows a party, known as franchisees, to operate their own business utilising the ‘Intellectual Property’ (IP) developed by another party, the franchisor, who has developed a proven business system.

The franchisee is able, through investment, to acquire under licence this IP such as products, branding and processes, along with training and ongoing support, to replicate the franchisors business and, in theory, replicate the success also. Think of it like a ‘business in a box’, where every aspect of the successful business is packaged up, and reopened in a different location.

The relationship operates on a clear premise: the franchisor allows the franchisee the right to use their trademarks, brand name and proven business model in exchange for continued fees and royalties.

A shortcut to success for the franchisee

This concept allows franchisees a business model that is evident to be successful, which can significantly reduce the risks that are accompanied with starting a new business.

For the franchisor, a franchise model can be a cost-effective way of expanding their business without requiring organic profits to fund development. A franchise with a strong model and appeal can grow very quickly, both nationally and internationally.

The relationship between franchisees and franchisors is symbiotic, with both parties offering clear advantages and potential for growth, in a franchise one simply cannot exist without the other.

A defining hallmark of a franchise is coherence. Franchise models are built upon the standardisation of processes and products in order to ensure a uniform performance across every branch of the business. This coherence not only cultivates brand recognition but also simplifies operations and quality control of facilities.

Franchising is lower risk than a stand alone business….FACT!

A recent NatWest/BFA Survey identifies a range of impressive facts including:

  • The Franchise Industry contributes £15 Billion to the UK
  • The total number of people employed within franchising has now reached 621,000 – an increase of 70% over the past 10 years
  • Over half of franchisees are now declaring an average turnover that exceeds £250,000
  • 97% of franchisees are running in profitability
  • At just  4.6%, failures within franchising considerably lower than that of other start ups.
  • 91% of franchisees declare satisfaction with their franchisor
  • 80% of franchised brands are UK-owned and developed

What’s the catch?

Well, by being a well proven business system, replicated by dozens or hundreds if franchisees over many years, the pathway to success is well defined, but just because a company is a franchise, it does not mean it automatically will be successful. In many ways, the risk in a brand new franchise or one that has few franchisees will be very similar to a stand-alone business.

The flip side is that the more successful and established a franchise model has become, the greater the entry cost and ongoing fees are likely to be, plus entry-level opportunities may be limited, especially if based on a geographic territory allocation.

There are lots of factors to consider when starting your own franchise business too. The benefits of brand identity, business structure and the franchisors IP equally limited freedom in decision making and can stifle entrepreneurial spirit. Someone who is ‘too entrepreneurial’ may stray from the proven business system as their nature is not to just follow a system but to challenge and redefine. A risk to the franchisee as well as the franchisor. For this reason a good franchisor will have a robust and careful exploration process to ensure that both parties are a good fit for one another.

How to find a good franchise

Franchises came in varying forms, ranging from retail outlets and fast-food chains to van-based businesses and executive and management solutions. One key consideration is market demand and longevity. One business that stands out in this respect is Auditel.

Established over 30 years and with a network of over 100 Franchise Partners, Auditel are cost management, procurement and carbon solutions specialists. With a legal obligation by UK Government for the UK to achieve a ‘Net Zero’ target by 2050, this means there will be increasing compliance and other pressures on organisations to start measuring and managing their carbon footprint. A huge challenge present a huge opportunity, and so Auditel is set to be a leading franchise model for years to come, with franchisees being incredibly commercially successful whilst also making a meaningful difference to the planet, which is incredibly rewarding all-round.

Should you invest in a franchise?

A good franchise can represent an exciting and reduced-risk route into self-employment, and with it the chance to cut free the corporate shackles and the frustrations of working hard for someone else’s benefit. Finding the right business that matches your ambitions and interests with a commercially savvy model, extensive training and support and long-term market opportunity could be the solution you are looking for. Continue your exploration process now and find out if a franchise is the right next step for you.  If you havent already done so, you can enquire here

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