What are the main benefits of franchising?

Benefits of franchising – Why buy a franchise instead of setting up in business alone?

Franchising in the UK contributes to over £15bn to the UK economy. Franchising also covers many different industry sectors, but what are the benefits of franchising?

What is a franchise?

Firstly to explain the benefits of franchising you need to understand what is a franchise. A franchise business is replicating an already proven business model. In other words the business has traded with a certain brand & in a certain way. The business has perfected it’s model over time through trial & error putting in systems to achieve success.

When a business decides to franchise they will need to create a set of documents, internal procedures & support infra structure so they can share this knowledge, this proven system to the person that buys the franchise, the Franchisee. Some of the documentation & activities will include;

  • Franchise legal agreements – This will include a franchise deposit agreement & franchise agreement
  • Intellectual property – If not already done already the business will protect the trade name, logo’s etc
  • Franchise operations manual – Very important document, forms part of the legal agreement between the Franchisor & the Franchisee. The franchise operations manual contains every the Franchisee will need to know to run the daily operations of the business.
  • Franchisor & Franchise business modelling – This will include cashflow forecasts & P& L assumptions etc
  • Franchise marketing material & marketing strategy
  • Staff & support infra structure to support incoming Franchisee’s
  • Joining a Franchise Association

This is a considerable investment for the Franchisor & many decide to use franchise consultants that have experience to put togther the franchise. A good Franchisor will be keen to recruit the right people so that their brand is represented properly by the Franchisee so this should be seen as a matching of the right parties rather than buying a franchise.

Franchising – In business for yourself, not by yourself

In other words the Franchisor has a vested interest in your success, if you make a profit & run the business well their will make profit & their brand will grow. You are effectively in business for yourself, but not by yourself!

Because of this failure rates for franchises compared to new start business are very favourable. Success or failure of the business ultimately will lie with you, the Franchisee. As with any business opportunity of investment you should carry out thorough due diligence, including buying a franchise.

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