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Franchising Defined – An Ultimate Guide

By 18 November 2020January 11th, 2021No Comments

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Franchising is a fabulous way of starting a business by leveraging the knowledge and expertise of already successful individuals in the sector you want to set up in.

Not only that, but you also get to jump on the back of their already well-established reputation and use their marketing materials for your company.

Sounds too good to be true? Well, just ask the owners of more than 8,000 UK franchises – more than half of whom report an annual turnover of more than £250,000, according to a 2018 report by the British Franchise Association and Nat West.

Buying a Franchise Agreement

Of course, there is a financial cost. That’s because you invest in a franchise. Depending on how successful the franchise company is, this can range from between £5,000 and £50,000. The legal document is called a Franchise Agreement and you sign for a set number of years – often with the option to renew.

Once you have signed this, you will receive training and continued support from the franchisor until you feel confident to run the business by yourself. You will also have the support and backing of a large network of other franchisees. And talking of which, the franchisor will also provide reassurance that no other franchisee will operate ‘on your patch.’

Someone else does the PR and Marketing

All the advertising, promotions and product/service development is carried out by the franchisor (who operates like a head office) and franchisees simply pay a monthly fee based on a percentage of their turnover. This means you can spend your time concentrating on your customers and training up a great team of staff to help you build a profitable business.

It’s your company

You operate independently as a franchisee in the sense that you are your own boss. There are standard company guidelines all franchisees have to adhere to, such as displaying the products in a certain way, or providing the service in a particular order of steps etc. But ultimately, you are responsible for your franchise. You hire your own staff, decide when to work, how much profit you want to aim for in your first year etc.

One of the aspects of franchising that people say they really appreciate is the fact that it can often be part-time or full-time work, depending on how many hours you want to put in. This makes it particularly appealing for women who don’t want to pay for afterschool care.

Why does a company franchise?

Or rather ‘what’s in it for them?’ Franchising is a great way for a company to expand quickly and get a bigger market share of their sector than if they were merely operating as a single company. There is strength in numbers, after all.

Franchising is also a great way of advertising the business ie people get to hear about the company quicker if there are a number of different franchisees operating under the same banner.

Another plus for a company to operate as a franchise is that franchisees have a much greater investment – financially and emotionally – in the company being a success than an employee. A member of staff can simply leave and get another job while a franchisee has invested money in the business and will work hard to achieve an impressive financial return.

Franchising explained

To find out more about franchising with Sourced, download our Franchising White Paper.

Request Your Copy of the Whitepaper




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