Franchise Your Business

Looking to Franchise Your Business in the UK?

Franchising your business can be a very successful way of expanding your business. Many of today's well-known brands have used franchising to finance and accelerate their growth into world brands.  In the UK Franchising should not be as seen as a testing ground for a brand new business idea but as a means of expanding an already successful business.

Is my business "franchiseable"?

Not all businesses are suitable for franchising but most business concepts can be. A "franchiseable" business would need to be:

• Credible – your concept needs to be proven with a good track record and an experienced management team. It needs to have a good local press and public acclaim.
• Profitable – franchising is not a means of rescuing a business that is under-performing, a business needs to be already successful and generating a sufficient gross profit margin to allow you and your franchisees to make money.
• Unique – your business needs to have a unique selling point that will allow it to be differentiated from competitors. This sustainable competitive advantage would allow it to compete successfully in its' market nationally, with possible potential to expand internationally.
• Transferable – you need to have a business where the systems, procedures, expertise, skills and know-how can be transferred to others.
• Teachable – you need to make sure all the systems are in place and the operating systems of the concept documented in manual form. You should also be able to train others in three months or less in the use of your systems and procedures.
• Supporting – you need to have or be able to acquire the ability to provide ongoing support to your franchisees.
• Affordable – if the franchise is very expensive there will be very few people who could afford to buy into your network.

What are the disadvantages?

• Costs involved – you need to be realistic about the cost of establishing a franchise network against the time it will take for you to see a return on your investment and ask yourself if you can afford it.
• Loss of control – Usually when you own it, you control it, but in franchising it is the franchisee that controls his/her unit and to a degree runs it their way. It's here when the operating manual comes into play, if the franchisee sticks to your systems then it's as if you are running the franchise unit yourself. Remember that each franchisee is a businessperson in their own right and so you do not have “hire and fire” rights over them . You do however need to monitor closely what the business is achieving and identify areas of poor performance. You need to have regular communication to make sure that the franchisee is doing things properly and sticking to your systems and procedures to meet their targets. A potential failure can have disastrous results for the network as a whole. You need to also protect your business from franchisees who may try and replicate the concept and steal customers/clients.
• Finding the Right Franchisees – it can be tempting in the early stages to simply recruit those with the required investment to help get your franchise up and running. This can be fatal as the wrong franchisees can damage the foundations of your franchise and bring failure to the whole network. You need to therefore invest time and money in recruiting methods and how to identify franchisees who are highly motivated with the potential to be successful.
• Managing Growth – having a large franchise network can be a nice position to be in, but you need to make sure that you have the required support staff to serve the needs of your franchisees. It is therefore better to be over-staffed at times so that you can react to any problems that may arise from old and new franchisees, this may involve changing the culture of your organisation to one that is support-oriented. If they don't get the necessary support they may find it difficult to achieve their aims and your business could suffer.
• Conflict Between Franchisee and Franchisor – The biggest negatives in franchising are the conflicts between the franchisee and franchisor which as a worst-case scenario, but not uncommon, can lead to legal proceedings. When franchisees are making money they are happy, but if they are not then the blame usually lies at the door of the franchisor. Allegations, rightly or wrongly, include lack of support, inadequate training, territorial problems, misrepresentation and even fraud. Frequent communication, adequate support, thorough market research and a comprehensive operations manual can help combat this.

What professional advice should I seek?

Franchise consultant – using a good franchise consultant will bring an extra perspective to your business as well as a solid understanding of franchising. They will initially help you to identify if franchising is right for you and if so how will advise you on developing your system as a franchise.

Generally the services offered by franchise consultants are

• Help with feasibility studies
• Franchisor operating manuals
• Help with business plans.
• Advice on funding

When finding a consultant look at a few, preferable those who are BFA members, and from asking about their existing and previous clients, including those they recommended didn't take the franchise route, you will get a good idea of who will be best for your business.

Accountants – your own accountant should be able to help you with your financial planning, including your business plans and guidance for franchisees on what they should be achieving from their business.

Solicitors – it is essential that you take legal advice, and should seriously consider using a lawyer that specialises in franchising. The BFA has a list of lawyers that are affiliate members click here for the list. The lawyer will help you prepare a comprehensive agreement and you may need advice on registering your trade and service marks. By using a specialist lawyer it will increase your brand value and will give you and your franchisees greater protection.

What steps do I need to take?

Having a concept that has been working well over a period of time, as a business in its own right, is the first step to a successful franchise. You should be able to understand how the business operates and what systems, procedures, expertise etc you need to transfer to or being to train a franchisee in. It will have also given you enough time to get your market research right and correct any problems and issues that may have arisen.

1. Understanding your business – You need to prepare a business plan for franchising.  This will look at issues such as the structure of the franchise, franchisee profile, territories that can be allocated to franchisees, staffing resources and your proposed franchisee support system.

How will the franchise opportunity work? What is the role of your business and what should the franchisee be responsible for?  Asking these questions will help you to establish some operating guidelines for your franchise. If you are g