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A B U S I N E S S P L A N N I N G G U I D E TO D E V E LO P I N G A S O C I A L E N T E R P R I S E : A S S E S S M E N T

Franchise

In opting for a franchise agreement, you agree to be bound by its terms. You should have your solicitor and/or accountant check the franchise agreement before signing anything.

When you buy a franchise you are buying the right to use a specific trademark or business concept that has already been tested. Thus, you will be able to capitalise on the business format, trade name and support systems provided by the franchisor. Franchising can be a very good way of entering into business development, as you can benefit from adopting a proven business model.

Before you decide on a franchise talk to other franchisees. Ask about their experiences. Key questions are: ‘Would they do it again?’ and ‘What would they do differently?’ Listen carefully to their answers.

Social Franchising Case Study Ben and Jerry’s Scoop Shop The Ben & Jerry’s Scoop Shop in Aberdeen’s Bon Accord Centre is the first franchise of its kind in Scotland, run by Aberdeen Foyer, a local voluntary organisation. Aberdeen Foyer aims to enable homeless and disadvantaged young people achieve social and economic independence. Ben & Jerry’s PartnerShop Program is a form of social enterprise, a growing movement in which nonprofit

organisations use the power of business for community benefit. PartnerShops are Ben & Jerry’s scoop shops that are independently owned and operated by community-based nonprofit organisations. Ben & Jerry’s waives the standard franchise fees and provides additional support to help nonprofits operate strong businesses. The primary aim of the ‘PartnerShop’ is to offer supported training and employment opportunities to unemployed young people.

You could opt to franchise from an existing social enterprise. The process is similar to a private sector franchise.

Case Study Greenworks The primary purpose of Green-Works is to bring good quality, low cost furniture to the 3rd sector and small start up businesses. Green-Works operates its warehouses through a network of regional distribution

partners; other community and not-for-profit organisations. All of these outlets have the common aim of providing training and employment to the disadvantaged, disabled or long-term unemployed. There are currently 8 regional outlets from Woolwich in the south east to Paisley in Scotland. www.green-works.co.uk

The advantages and disadvantages are similar.

Advantages of a franchise

Disadvantages of a franchise

Franchises have a lower failure rate than other start-up businesses, since most of the teething problems have already been solved.

The essence of a franchise – buying and operating a proven concept – can make it seem like you are more of a manager than a boss.

You get a complete package including trademarks, easy access to an established product, proven marketing method, equipment, stock, etc.

It can be expensive to buy and operate a franchise. Upfront costs can be significant and ongoing royalty fees may impact on your cash flow.

You can take advantage of the buying power of the entire network which can help you compete against larger organisations.

Just as a franchiser’s reputation can benefit you, the franchiser’s problems are also your problems.

Many franchisers provide financial and accounting systems, ongoing training and support, research and development, sales and marketing assistance, planning/forecasting and stock management. Some franchisers help with site selection so your business is located in an area where it can thrive.

Your franchise agreement is a binding contract and can be quite restrictive. This can be problematic if the franchiser does not understand the local market or the social needs that you are aiming to meet.

Advantages of a social franchise

Disadvantages of a social franchise

There may be closer values base for joint working.

In some cases, the franchise may not have been fully tested.

Buying an Existing Business Buying an existing business is a sensible alternative to starting a business from scratch. It may seem like an easy option but buying an existing business needs a methodical approach. There are a range of issues to consider including why is the business being sold, how much investment is needed to grow and develop the business, what is included in the purchase price etc. Due dilligence is required throughout the process.

Purchasing a franchise usually requires legal advice – this can be costly.

You benefit from national or regional advertising and promotional campaigns by the franchisers.

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A Business Planning Guide for Social Enterprises  

The much loved Social Enterprise Planning Guide. Proving to be very popular. Brought to you by Forth Sector Development.

A Business Planning Guide for Social Enterprises  

The much loved Social Enterprise Planning Guide. Proving to be very popular. Brought to you by Forth Sector Development.

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