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What is a franchise?

Tired of the 9-5 grind? Come into some money?

An ambition to utilise an entrepreneurial spirit?

Franchising provides a pathway to being in control of your destiny by owning your own business.

So, what is a franchise?

At its simplest, franchising is a business model that allows companies (franchisors) to expand the delivery of their products or services through brand licensing agreements purchased by people interested in owning their own business (franchisees).

In the UK, franchises vary from common fast food and coffee outlets, to after school kids clubs and nearly every industry in between. You may be surprised to learn that some of your favourite brands that you use are franchises.

How does it work?

To become part of a franchise network, a franchisee must pay an initial setup fee (more info here) which buys into the wider brand, and grants access to the franchisor’s business manual, which is a step-by-step guide on how their model works.

The franchisee is then trained by the franchisor on how to run the business, and given guidance on how best to reach their market. Franchise models are based on clear structures that have had success in the past. This means that by following the prescribed system enhances the chance of success.

Whilst the franchisee becomes a manager of their business, there are typically ongoing royalties (regular payments) made to the franchisor – these can be a percentage of profits, or a simple flat fee.

There is usually a fixed term that the franchisee owns the franchise brand for (commonly between 5-25 years). After this, there is the option to renew the license, sell on the franchise to an interested third party, or give it back to the franchisor, usually at a cost.

Who suits franchising?

Different people will suit different franchise models. However, the core set of traits that stand you in good stead for any franchise are:

  • Commitment

    • A franchise is not a short-term engagement. You need the money and time available to ensure success.

  • Passion

    • Passion gives you the drive to keep going when times are tough. Excitement about your products and industry are also key in order to sell to customers.

  • Hard work

    • Nothing worth having comes easy. It’s your business and your life. You’ll need to put in the effort to make sure it is a success.

  • Compliance

    • Franchises are successful business models. You will need to be able to stick to a formula that has worked time and again, this is the best way to succeed.

Sound like you? Check out the latest franchise opportunities in your area here.

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James Coombs

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