How Much Does it Cost to Join a Franchise?

Finances

The Franchise Market In The UK Has Gained Rapid Popularity Over The Last Few Decades

A franchise is a set up that has the legal right to use the name of a better established business. The franchisee (the investor) buys the rights to use the business’s (franchisors) name, expertise, ideas and processes. In return the business name expands and grows, catering to more clientele and generating higher influx of revenue from the franchise.

Franchises have a better success rate than a new, solo venture. The solo venture comes with a lot of risks, teething problems and costs. The name and brand needs to incur high marketing costs in order to establish the name and reputation of the business. For the first few years, no profits are expected and it may even be difficult to break even. All these problems don’t exist if you invest in a franchise opportunity. The brand name and reputation has already been established of the parent company. The target audience already knows what to expect out of the brand. If the business has a good reputation, the same will be expected from the franchise. Usually, the customers don’t even know if the business is run by the same management or if it is a franchise, with a different management. They just come for the name. This gives the franchisee a big advantage. They can cash on the good reputation of the business and build on it. If the new owner is smart, he or she can take the brand name to new heights.

Another reason for the better success rate of the franchise business is the constant on-going support the franchisor provides to the franchisee. Since the investor is buying the brand name, the reputation of the franchisor is at stake. As mentioned before, the customers don’t usually know if it is a franchise or not. If they have a bad experience at one place, they will only blame the brand, and not the franchise. Therefore, the franchisor has to be very careful in who they are selling their hard-earned brand name to. The franchisors try their best to make sure the business is setup properly and the franchisee is stringently trained and taught how to manage the business. The support is available at every level. The franchisors help the new owner by first extensively training them in the functionalities of the business and then giving them access to their manual, values and strategies. The franchisors want the customers to have a similar experience at all their franchise outlets so they try their best to create a harmony between the franchises.

 

The Franchise Opportunities In UK Are Endless And Require Varying Investments

The cost to set up a franchise is much lower than starting a solo venture. The franchise industry is so large, that one can find a business within the budget they are willing to spend. There are franchises of business available for as low as £500. The return on investment in franchises is quite high and stable. The best part about owning a franchise is that your marketing costs are cut to less than half, thanks to the parent company, who has already established the brand name. Franchise opportunities are available in each and every industry from automotive, to hotels, to coffee shops, to child related business, to food businesses, you name it.

The highest investments for franchises are in the hotel industry. Naturally the cost of buying the hotel infrastructure is high. Then there are businesses that don’t even require you to step out of your house to run. These business franchises will even provide the franchisee with the basics, like laptops or computers or vending machines etc. The cost of owning such a franchise is bare minimum and the returns are fairly high.

This industry is growing day by day and it is perfect for those people who want to change their careers, or start up their own business, or work from the comfort of their own homes. It is always a better idea to invest in a franchise, as the cost of owning a franchise is much lower than owning a solo venture.

If you are on a budget, there are small franchises for sale in each and every industry. So, if you want to invest in a coffee shop for example, you can start as low as £5000 and go up to an investment of £300,000. It is really up to the franchisee to decide on what they are willing to spend.

One Of The Advantages Of A Franchise Is That Most Of Them Start Generating Profits From The First Year 

Since the market already knows the brand name, the new franchise does not have to invest a lot of time and energy into attracting the customers. Due to an already established brand name, the customers start coming in themselves. The initial cost of investment is basically payment for this ready-made reputation. In some cases, the higher the cost of investment, the higher the return. The bigger brand names sell their franchises at a much higher rate than the less popular brands, naturally, as they have spent more time and effort on building their branch name. For example, if you are investing in a Costa Coffee franchise, it will cost you over £200,000, but then the return will be just as high, because it is a renowned, multinational brand. The franchisee will save on the marketing as well, as just the brand name will attract customers.

It is much cheaper and safer to invest in a franchise than a solo venture, and the returns are substantially higher as well.

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