What is franchising?

Franchising gives you the confidence to start a business on your own.

 

Growing rapidly worldwide as a proven way to develop successful new business ventures, business format franchising offers a ready-made solution to the uncertainties faced by those wanting to start up a new business.

 

When most people hear the word 'franchising' they probably think of fast food restaurants such as Burger King or McDonald’s but what you might not know is that franchising offers a wide variety of business opportunities for you to become a part of.

 

Franchising has proved to be one of the most successful ways of starting a business, compared to starting out on your own from scratch, and there are now over 665 different businesses operating as franchises in the UK.

 

The franchise principle is simple – all companies want to grow, so the idea is to permit a license to others to help sell their established product or service.

 

The owner of a business – THE FRANCHISOR – grants a licence to a local operator – THE FRANCHISEE – to use the franchisor’s name, product, service and association goodwill for a specific period of time. The franchisor in turn supplies a complete, proven concept together with their own unique 'know-how' thereby removing, for the franchisee, some of the uncertainties in starting a new business.

 

To find out more about the frequently used terms and phrases of the franchise industry, including the The British Franchise Association levels of membership, visit the franchise glossary.

 

 

What are the advantages of a franchise?

  • You don’t have to come up with a business idea, which might be time consuming and expensive
  • A tried and tested market
  • An established trade name
  • Access to an experienced network and advice
  • An allocated franchise trade area
  • Training in business skills and sales will be offered from good franchises
  • Market intelligence from the Franchisor
  • Marketing activities undertaken by the Franchisor
  • Bulk buying powers of the franchisor
  • Finance may be more readily available
  • Lead-time to success with a franchise may be smaller than that of a regular start up

Who is in control?

Each franchise outlet is owned and operated by the franchisee and is the franchisee's very own business. However, the franchisor retains control over the way in which the products and services are marketed and sold.

 

To make a franchise successful there needs to be a solid partnership, combing the franchisee’s talents with the franchisor’s experience and knowledge.

 

 

What is the cost of the franchise?

The franchisor will receive an initial fee from the franchisee, payable at the outset, together with on-going management service fees for the franchise license - usually based on a percentage of annual turnover or mark-ups on supplies.

 

In return, the franchisor has an obligation to support the franchise network, notably with training, product development, advertising and promotional activities.

 

Find out more about franchising - visit a franchising exhibition

 

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