The basics of Buying a Franchise

by Startacus Admin

Now the good news-  the benefits

• The company image- You will benefit from the fact that your business will be part of an established company that is already well known to public and has a strong customer base meaning that you don't have to build a reputation or following from the ground up.

• Many franchisers will undertake the majority of the ground work of setting up the businesses including finding a location and demographic studies meaning that you can focus on the day-to day running.

• Franchises have a much better chance of succeeding than stand alone businesses, according to the British Franchise Association some 91% of them were profitable in 2012

• The sheer size of a franchisor means that they benefit from being able to buy stock in bulk and in turn this saving is passed on to you

• It takes much of the guess work of setting up a business as you can clearly review the history of the business and get a realistic expectation of the returns you can expect to see

• Your franchisor will already have systems in place for all aspects of running the business such as recruitment, bookkeeping, stock ordering and health and safety regulations meaning that you only have to follow their advice and you won't go far wrong.

Are there any drawbacks?

Of course the initial and ongoing fees will be viewed by some as a pretty big drawback but its important to view these in the context of the business and decide whether or not they represent good value for money. Its worth also noting that

• Its their way or no way- As a franchisee you generally will have to adhere meticulously to the regulations of your parent company, this could include anything from store layout to what cleaner is used to wipe tables- Needless to say if you like to be in complete control this could be a challenge

• Some franchisors do not offer the level of ongoing support that you may require, a few see their role as setting up the business and little more. Be sure to have a clear understanding of what you can expect from them before agreeing to anything.

• Opening up a franchise does not necessarily mean that you will make any money.  Its true that franchise operations have a higher success rate but there is no guarantee of profits, it would be useful to speak to someone who has set up a franchise in a similar location to gauge the realistic prospects.

• You will probably need to take out a bank loan in order to pay the initial franchise fee, whilst these are often on favourable terms they will represent a significant expenditure

As with any businesses the key to opening a successful franchise is planning, preparation and a realistic expectation of the returns you will receive. If you make sure you fully understand the contract terms and are willing to put in the work it could just be the route into self employment you have been looking for!

Intrigued? Then play a visit to the British Franchise Association for more information...

If you liked this post, you might also like our previous post on Franchising

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Published on: 16th September 2013