What is Franchising?

What is franchising and is it right for meFranchising offers an excellent opportunity for you to be in business for yourself.

When you hear the word ” Franchising” you probably think of fast food restaurants such as Burger King, McDonalds or Wimpy. But the truth is Franchising is so much wider than that.
There are Franchises available in almost every business area that you can think of in all price ranges. In addition, because franchising has such a low failure rate your chances of success are extremely good.>/p>Compared to starting your own business from scratch, franchising can provide a relatively safer route into self-employment. The franchisor has done it all many times before and can therefore help you to eliminate all the mistakes you most probably would make if you tried to do it all by yourself.

Franchising can offer a successful business concept, proven marketing and operational methods, ongoing support and an established identity.

A successful franchise relationship is like a partnership. It combines your talents with the experience and knowledge of the franchisor. With franchising, you are in business for yourself not by yourself.

Franchisors not only have sound training programs, but also knowledge of financial requirements, marketing, competition & buying contracts – knowledge that might take you years to collect on your own.

How to recognise pyramid selling
The most serious frauds which have been perpetrated were described as pyramid selling, or multi-level marketing. Often confused with franchising by those who seek to profit from the vulnerability of the unwary. They are presented as foolproof and tempting methods of making easy money and are often marketed by presenting successful participants, who speak of their great financial success.

These schemes involve the sale of distributorships to purchasers who may divide and subdivide them, and sell them on to those whom they recruit. Expansion of the enterprise takes place on the chain letter principle.

The objective is to build up a sales force which will sell the companys products or services from door-to-door. In practice, selling the goods or services is very often difficult because the prices are usually high and there in no established market for the products. No attempt in made to advertise and promote the sales of the products. Selling distributorships is much more lucrative and then become effectively the companys business.

Commission is derived from a percentage payment of the sum paid to the promoter of the scheme for the recruitment of participants and on commission of sales made by other participants in the scheme.

Why do companies franchise?
For a company with a product or service to sell, franchising provides an excellent opportunity for rapid expansion without an enormous outlay of capital. It is a distribution system that allows a business to conserve capital, and at the same time achieve fast market penetration making it a very attractive proposition to most business owners. One of the greatest advantages to them is that they get 100% commitment from their franchisees who have a stake in the business rather than staff or managers who simply work for a salary and may be less motivated.

Why should I consider franchising?
There are many individuals who like yourself, want to be their own boss. They see no long range security in working for someone else, and feel that their potential income will always be limited as an employee. Franchising offers these individuals an opportunity to break free & own their own business whilst at the same time minimizing the risk that is inherent in opening an entirely new business from scratch. Franchising allows you to follow a tried and tested business system, which will greatly improve your chances of success, as the statistics prove.

What are the benefits?
Franchising first became a recognised force in the UK during the 1970s. According to a survey carried out by the National Westminster bank and the British Franchise Association, the overall turnover of the franchising industry last year was estimated at £9.3 billion, with the number of business format franchising systems growing to 665.

The 35,600 individual franchised units in the UK are growing to give total employment in the sector of more than 316,000. This makes franchising larger than the whole energy sector and almost as big as the whole of the armed forces.

Franchising has proved to be the most successful way of starting a new business

There are franchising opportunities in almost every area of business ranging from one-man operations to large multinational enterprises employing thousands of people

It is a sad but true fact that all of the new businesses started in the UK completely from scratch, in five years time only one in five will be still trading.

Compare this with franchising which has a success rate in excess of 90%. This means there are obvious advantages to franchising over starting up on your own.

Not only are you more likely to succeed, but also you have the freedoms of self-employment as well. And when you need help, guidance is always at hand not only from the franchisor but from the Franchised Business also.

What should I look for in a franchised Business?
When you take up a franchised business you are entering in to a long-term partnership with the franchisor. It is therefore vitally important to check the background & business performance of your prospective partner. This is part of the service that we will help you with together with, your professional advisors.

At this stage, when you are just commencing your search, it is perhaps more important to establish the basics.

The keys to a successful franchise relationship are:

  • Does the product or service interest you and fire you with enthusiasm?
  • Does the company have name awareness?
  • Does it have a successful operation and marketing system?
  • Is it a viable proposition?
  • Do you understand the role you will play?

The above represents the initial starting point. A great deal of further research will be required before you finally satisfy yourself that you stand a good chance of being successful by purchasing a particular franchised business, above all else make sure you talk to franchisees who are already operating. .