FRANCHISE BUYERS GUIDE
in this guide
3 Introduction to franchising
4
choosing a franchise benefits of franchising
understanding franchise costs
franchising documentation useful contacts 5 6 8 9
an introduction to franchising
There are more than 1,000 franchise opportunities in the UK. Franchising is a concept of business expansion where a business owner grants the rights to trade as that brand to a third party. The brand’s owner is known as a franchisor. The investing party is known as the franchisee. A franchise network can have many franchisees, each with their own territory. Franchising has existed for decades, where the founders of the concept happened to be exploring opportunities for reaching more customers. With franchise opportunities in almost every sector, franchise brands are deeply integrated into society. Perhaps the biggest known franchises are McDonalds, Costa and Burger King. Other franchise opportunities exist, attracting thousands of new entrepreneurs every year in the UK. From oven cleaning to fast food, dog walking to vending machines.
choosing a franchise
Choosing the right franchise is one of the most important parts of becoming a franchisee. Ensuring that you choose a franchise that aligns with your aspirations and interests. There are more than 1,000 UK franchises to choose from.
Choosing the right franchise starts with exploring what’s on offer. Understand the investment required, what is included, and the levels of support provided.
Make a list of franchises which suit your interests and request information from each.
Contact the franchisor either through their website or a franchise directory to request a prospectus , territory map and profits/losses
Consider attending franchise exhibitions to ask questions face to face.
Consider speaking to a franchise consultant as well with any queries you may have.
benefits of becoming a franchise owner
established brand
Become part of a network of franchisees who together build up the reputation of the brand and multiply the success for all.
greater flexibility
Many low cost, home based franchises exist, giving franchisees freedom to work to their own schedule.
business in a box
You get full business startup package including everything you need to launch the business.
your asset
The business is yours. You pay ongoing royalty fee for access to the brand, but when you decide to move on, the business holds significant resale value.
access to support
Full initial training, ongoing support and a sector with endless guidance such as from the British Franchise Association.
far less risk
You’re using an established business model. No wonder franchising has a 93% success rate vs 79% for independent startups.
understand the investment Investment
The franchise investment in most cases will be your biggest cost when investing in a franchise. The initial investment provides you with everything you need to start running the business. This includes access to the brand, starting stock and operating equipment, a website too if necessary.
Capital
While some businesses like owner operated cleaning and pet franchises usually offer income / cash flow from day one, some franchises require you to set aside working capital, often at least the same sum as the investment. Working capital is used to pay for staff wages, ongoing marketing etc until the profits start to exceed losses.
Royalties
Continued access to the brand requires franchisees to pay a percentage or fixed amount each month. This may also help with national marketing to drive leads.
discover franchise opportunities
What are you interested in? There are more than 50 different types of franchises to suit everyone’s lifestyle. Whether you’re a parent looking to work from home, or you’re money savvy and looking to make as much money as possible. There are franchises for those ambitions. Franchises with flexibility. Franchises with unlimited earning potential.
Single Unit Franchises
A single unit franchise is where an investor purchases the rights to trade in a single territory. This is your typical franchise, from oven cleaning to dog washing.
Area Developer Franchises
An area developer franchisee is committed to opening multiple units within a specific area.
Master Franchisee
A master franchisee is like a sub franchisor who owns the rights to the license in a country or large territory. The master franchisee grants the license to individual franchisees in an area. If you wanted to bring an international brand into the UK market, you’d be a master franchisee.
franchising documentation
Franchise Prospectus
The first document you’ll receive, detailing information about the business, what the franchise does, and what you get and what you can earn.
Franchise Deposit Agreement
If you like what you’ve learnt about a brand, your first step is securing the territory until you can raise the required investment/capital and secure a premises (if necessary) to start the business.
Franchise Agreement & Franchise Operations Manual
You’ll be given these after you’ve signed an NDA and usually after you’ve signed a deposit agreement. You’ll be advised to go over the agreement with a franchise consultant and lawyer before you invest in the franchise.
The franchise operations manual outlines procedures, running, health and safety – every aspect of the business.
getting support
Most franchisors actively work with a franchise consultant. A franchise consultant works with the franchisor to help them franchise their business.
From the very first stages to creating the documentation, pilot franchise and running ongoing discovery days. They can help you with any questions to may have.
Many franchise consultants are so deeply involved with working with their franchise clients, you may hear back from a consultant when making first contact rather than from a marketing person at the franchise brand.
Franchise lawyers can also help you understand the franchise agreement.
Many banks and financial institutions are actively involved with franchising, such as Barclays and NatWest – they can help you raise the required funds for the investment or a commercial vehicle.
useful contacts
Despite there being no government regulation for franchising in the UK, the franchising sector is incredibly well supported. By banks, legal teams, and the trusted self regulated body – the British Franchise Association who partner with banks, franchises and consultants to make what franchising is today. Whether you’re looking to buy a franchise or franchise your business, there is a wealth of support out there available to you.
Multiple franchise exhibitions take place across the country, plus regular events held by the British Franchise Association such as Franchise Power Hour to boost your knowledge of entrepreneurship through franchising.
Get in touch with one of these useful contacts today.
Franchise Finding a Franchise
Directory of UK franchises for sale with resources to help those looking to buy a franchise. franchise-directory.co.uk
the bfa Support / Learning
The UK’s self regulatory body for franchising. All members are thoroughly checked and the board are able to help with any queries.
www.thebfa.org
The Franchise Consultant Support
Working with many brands, The Franchise Consultant know how to make franchising work. Get in touch for any advice you need.
www.thefranchiseconsultant.co.uk