To Franchise or not to Franchise?

Business owners who are looking for advice on how to grow their business, ought to consider franchising as an option.

Whilst, per capita of population, the UK remains very under franchised, no one should be under any illusions that the process of Franchising a business normally isn’t quick and requires a large investment of time (and hence money) by the business owners to get to market. The other area to be aware of is that despite the passion that business owners have for their own business, if it doesn’t make enough money in the first place then it will never work as a Franchise.

Business owners also often expect to be able to avoid the requirement to sell the franchises themselves. Be under no illusion; long and hard experience has shown that successful franchise systems rely on the business owners being very committed to the sales process and ensuring that the right people (‘winners’) are recruited to fill the first few places. Future sales are always reliant on the first ones through the door.

There are always horror stories circulating about franchises not working. Like life, we tend to remember the bad stories more than the positive ones but still the statistics show that where roughly 85% of new businesses fail in the first year, the inverse is true of franchisees. Indeed these figures are exactly reflected in the longer term 5 year figures too. The upfront cost of the knowhow or the ‘system’ fades into oblivion in light of this statistic alone.

In economically challenged times, franchisee sales tend to increase. The common denominator for a prospect looking to buy a franchise is always life-change. This is often coupled with a general dissatisfaction at their employers and of course, severance payments can lead to rich opportunities for the franchisor.

The key element for any business looking to franchise is: can everyone make some money? If the answer is no, then it is doomed before the outset. Additionally and often omitted is the importance of the franchisor being properly rewarded.

So, to answer the question: It’s a fantastic way to build a business leveraging other people’s money to build your company and brand but tread lightly and don’t take your eye off the cash ball.