Perhaps you have been thinking about being your own boss for a while.
Do you want to start up a traditional business from scratch? Or are you considering to become a franchisee? Here are 9 good reasons why you should give franchise a serious consideration.
9 Good Reasons to be a Franchisee
1 A Proven Business Model
According to the Franchise Direct UK Survey, over 50% of franchisees said the primary reason they wanted to be a franchisee is that they want to be their own boss but do not want to come up with a business idea of their own. Developing your own business idea, market test your products and services from scratch can be time consuming and costly. So when you buy a franchise business, you are really saving yourself the time and effort that will have been otherwise needed for the development of your own idea.
2 Earning a Second Income
The results from the Franchise Direct UK Survey also reveals that many aspiring franchisees (31.4%) are looking for franchising as a way of providing an additional income. This is certainly possible if you already own other businesses or if you are in employment (and do not want to give up your current job).
You may want to keep your current job or continue to tend to your current business commitment while running a second (or additional) business. This maybe possible if you are a franchisee: you can hire a manager to look after the operations so that you won't need to physically run the business daily. Or you can choose a home-based franchise business that will enable you to work flexi-hours.
Running multiple businesses is certainly possible. But do bear in mind that as with traditional business, whatever type of the franchise it is, it still requires your hard work and full attention. So make sure you are well organised.
Another thing to note is that it's not uncommon for a franchisee to be running more than one franchise outlets, so you could be earning multiple incomes.
According to the British Franchise Association and NatWest Franchise Survey, franchising is going from strength to strength and is a great contributor to the British economy. The survey reveals that a record 97% of franchise outlets reported profitability in 2015, with 56% saying they are "quite" or "very" profitable. So a franchise will give you a very good chance of profitability. This is good news indeed for potential franchisees.
4 Franchisee has a Low Failure Rate
The results from the British Franchise Association and NatWest Franchise Survey also shows that just 1% of franchise businesses had to close down in 2015. This is remarkably low compared with traditional businesses (According to an article in the Daily Telegraph, half of the start-ups fail within the first 5 years).
5. Easier to Get a Bank Loan for a Franchisee
There are many ways to get funding for your franchise business and most potential franchisees will consider getting a loan from the bank. You will get a very favourable outcome if you approach banks that specialise in providing loans to franchises. This is because for well-established franchise brands, banks such as Lloyds Bank will consider lending up to 70% of the total start-up costs including working capital.
6 Purchasing Power
Depending on the kind of business, as a franchisee, you maybe able to eligible for great discounts on your purchases because of the established relationship between your suppliers and the franchisor. This will have impact on the profitability of the business.
7 Off-The-Shelf Brand
Starting a traditional business can be very hard as mentioned above: you would need to research on your own idea, develop your products and services while finding out what your target customers like and don't like. As you are doing that, you would need to what your brand is. Your brand is more than just a business logo. It's about what you do and how you do it. It's about what your values are and how your present it to the public as well as internally to your own organisation. All that takes time and money to develop. So the question to ask is "Can you afford to build your brand from scratch?". If the answer is no, then buying a franchise may well be the solution for you. When you buy a franchise, you get a proven business model with a brand that is established.
8 Shop fit Assistance
Unless your business is home-based, it will need a physical presence on the high street or in a shopping centre. If you are starting a traditional retail business and you need a shop fitted. Unless you are a shop designer (or architect) yourself, you will probably need to hire a professional to do the design for you. The design (both interior and exterior) will need to incorporate your brand and it will need to be fitted into the size and shape of the chosen unit. The design will also need to meet the functional requirements of the business.
So if you are starting a traditional business, you will need to work with the designer and convey all your ideas across to him/her. The design may need many revisions before its finalised to meet your re. Again, it equates to time and costs.
As a franchisee, you will receive support from the franchisor: as they will have extensive experience of fitting a shop and can provide a design that is tailored to your chosen unit quickly. And it will be a design that is consistent with the brand and meets the functional requirements at the same time. So consider the time and cost you will have saved by being a franchisee.
9 Ongoing Support
Another benefit of being a franchisee is that you will not be alone when you are running the business. The Franchisor will provide you with the help that you need to get the business launched and the help will continue after the business is up and running.
From finding the ideal location for your unit, contacting suppliers, marketing, to training you and your staff, the franchisor is there to give you the assistance, the advice and the guidance that you need.
Take the first Step
There are indeed many good reasons for being a franchisee. The economic condition seems to be right for it now, with the kind of growth that we are seeing with franchises in the UK. If you are risk-averse, looking for a business that is proven with a good chance of success, then franchise is worth your serious consideration.
If you haven't started your search for the right franchise already, why not kick-start the process by reading A Guide to Becoming a Franchisee.
If you want to know how to evaluate a franchise business, then you may find a 9-Point Check List useful.
How to Open more than 2 Outlets in 12 Months
Do you want to know how it's possible to open 2 franchise outlets in 12 months? We have a free case study for you.