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Business Advice, Featured

Buying into a UK Franchise 101 – Pros, Cons and What you need to know

If you are eager to get involved in the world of entrepreneurship, you have a few main choices. Of course, you can use your own brilliant ideas and creative force to launch your own completely unique business idea, you could buy an existing business or you could join an existing family business and work your way up to the top.

If these options do not sound attractive or doable, there is another option – franchising an existing successful business and opening a new location in a (hopefully) lucrative locale. Franchising can be a great option for newbies to the business world or for people who want to make a dynamic investment.

What is Franchising?

Simply put, a franchise is a business model in which a business brand owner (the franchisor) allows an investor (the franchisee) to purchase a license or trademark that enables them to open another branch of the original business. The franchisee will also pay the franchisor a monthly or annual fee for the privilege of the ongoing trademark and brand use.

In the vast majority of cases, the franchisee will then open a new location that is indistinguishable from the original; branding, products, available services, and décor are usually completely identical to the flagship location. Franchisees usually also agree to purchase their supplies and raw materials from an affiliated dealer or from the franchisor themselves.

Why Should You Buy a Franchise?

Pros

  • You will tap into an existing customer base – As a franchisee, you probably chose the brand because you believe in the product or service and enjoy utilising it on a regular basis. Just like you, there are probably many other clients out there who believe in and enjoy patronising your business already, giving you an existing customer base.
  • You can gain support and mentorship from your franchisor – Starting any business can be an intimidating and stressful time as you attempt to gain your footing in the market and juggle hundreds of tasks at once. As a franchisee, you have an existing resource that you can tap into – your corporate owner. They have been through all of this before, and it is in their best interest to help you succeed. A large, successful fleet of franchises will make their company stronger.
  • You’ll be buying into an existing and successful business model – Further to the point above, when you purchase the license for a franchise, you are banking on the fact that an established and proven system of operation and training already exists. The normal trial and error (that can cost you a lot of money) has already been conducted, and so you can focus on the daily tasks that will make your location a success.
  • You will enjoy strength in numbers – When you buy into a franchise, you are buying into an established supply chain – materials, supplies and services can all be purchased in bulk between you and your fellow franchisees. This means that you get the best prices possible.

Cons.

  • You lose creative control – If you buy into a franchise, you must be prepared to engage in every promotion, activity and creative decision that the head office makes on your behalf. While you might get some input, the decision will ultimately be out of your hands, and you might find yourself participating in launches and products that you simply don’t believe in – and you must grin and bear it.
  • You’ll pay both initial and ongoing fees – Remember, once you have paid your initial start up fee, there will be ongoing fees on a weekly, monthly or annual basis (or even all three!). In most cases, franchisors take a cut of your takings, in addition to other fees. These royalties will usually be deducted from your turnover, not from your profits – so if you are operating on a tight profit margin, you might feel taken.
  • You are at the mercy of other people’s decisions – Finally, the grim truth is that any change at a head office level can affect your business in a negative way. If your franchise decides to try a bold new strategy, you will be compelled to go along with it, even if this drives your business – and theirs – into the ground.

Interesting Franchise Opportunities Across the UK

If you are considering purchasing a franchise, you need to do some research and decide what business model is the best for you. Do you want to invest in a casual dining restaurant? A fast food location? A health food shop? Even a handyman business – there are franchise opportunities across many sectors in the United Kingdom. Here are just a few of our favourites.

  • Papa John’s Pizza – If you enjoy Italian American pizza, good news: Papa John’s is available to franchise across the UK. They have over 4800 locations across 40 countries, and they have proven success.
  • Marston’s Pubs – Every dream of opening your own little pub? Marston’s Pubs have a tried and tested business model, and with an initial investment of only 20,000 pounds you can help to make your dream a reality.
  • RUSH Hair Salons – You don’t need to be a stylist to own a salon! RUSH Hair Salons is an expanding UK brand with an existing client base and a large profit margin.
  • eTyres – Businesses that deliver goods and services to people in their homes are ever increasing in popularity – eTyres is a unique service that will change your tyres and replace your car battery in the convenience of your own home. A truly forward thinking franchise to consider.

No matter what you decide, there is no denying that franchising is increasing in popularity, as more and more people want to get in on tried and tested businesses.

May 5, 2016by Anna Lemos
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