Franchising offers a lower-risk opportunity to launch and run your own business. It allows you to be in business for yourself but not by yourself, as you can lean on the support of a franchise brand.
As with anything, there are reasons for and against franchising which should be considered when researching ways to launch your new business. UK managing director of FASTSIGNS, John Davies, has provided his start-up franchising advice.
Get a Head Start
Opening a franchise gives you a headstart on independently launching a company. A good franchisor will have tried and tested processes for business practices, such as accounting, marketing and sales in place. Prior to launching a franchised business, the franchisor will train you in their methods and processes to help you to effectively implement them into your new businesses daily operations. They will also have a well-established brand name that will be easily identifiable, a clearly defined product and service offering and a target customer base, that will help you to penetrate your local market quickly and efficiently.
Franchising also provides a ready-made network of like-minded business professionals, who have all launched their own franchise business. A positive network is an invaluable resource and can offer support, provide guidance on common challenges and can recommend growth opportunities for your new business.
Adhering to Brand Guidelines
A franchises brand guidelines are extremely important to their brand’s integrity, these guidelines can relate to anything from the decor in your facility to the type of font used on marketing collateral. They are in place to help to maintain consistency across all of the brand’s franchised outlets. If you are opening a franchised business, you should be prepared to adhere to their brand guidelines as closely as possible.
Although this can seem daunting, it is in your franchisor’s best interests to ensure you are fully versed in their methods and processes, to enable you to uphold their brand guidelines and do justice to the brand’s integrity and positioning.
A Wider Pool of Knowledge
Support doesn’t end once the doors to your franchise open – one of the main reasons many start-up entrepreneurs choose franchising is the ongoing assistance they receive. Rather than going it alone, your franchisor will be on hand to help you at every stage, from financing and stock control to marketing and retaining customers. While the level of assistance varies, every franchisor will provide initial training, along with financial support to help get your business off the ground. As a franchisee, you should never be left to struggle alone or make risky, uninformed decisions.
Opening a franchise requires investment and you will have to pay an upfront fee to join the business, along with a range of other payments. Many franchisors also want some form of financial security from their applicants, to make sure they have something to fall back on if the first few months are tough. Having working capital not only helps you in the coming months but will also make you a much more desirable candidate for the franchisor.
A portion will also be taken from your monthly earnings as a Management Service Fee (MSF), and once your contract is up for renewal, another payment is often expected if you want to continue trading under the brand.
Access to Business Loans
One advantage of being a franchisee is that you could be eligible for better rates on business credit or loans. Banks might look at you more favourably because franchising is seen as a much safer investment than starting a business independently. Before applying for finance, always speak to your franchisor first, as they should be able to give advice or put you in touch with banks that can offer a good deal.
Managing Your Reputation
Even though franchisees operate as independent businesses under a larger brand name, customers tend to think of a single brand, rather than the individual outlets. This means that every member of the franchise network has to do their bit to uphold the network’s reputation, if one centre falls short, it could affect the reputation of the brand as a whole.
Some franchisees may also be concerned that they are stepping on the toes of other businesses in their franchise network – although, this tends to be very rare. Most franchisors have a policy which provides clearly defined business territories to help avoid competition between individual franchises, within a network. One advantage of being part of a network is that franchisors may carry out local research into market competition and demand, this knowledge can assist you when searching for a prime location for your business.
As we have outlined, opening a franchise can offer an easier, quicker path to success, although it can require financial commitment and leadership. If you do choose to open a franchise, it’s a good idea to sign up with the British Franchise Association, which offers franchising advice for start-up businesses.
For more details on FASTSIGNS, its full range of business services, and details on becoming a franchisee, click here.