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Step-by-Step Guide to Becoming a Franchisee in UK

Am I suited to going into business for myself?

  • Can I commit myself to working hard and taking all the responsibilities of running a business? Often when starting a business, you would have to commit yourself to working long hours and either manage or carry out various tasks in all areas of the business.
  • Am I healthy and able to work hard and long hours?
  • Can I address all the negative thoughts and worries that accompany being in business for yourself:
  • Do I want to take a chance and invest my hard earned cash or capital into a business?
  • Will I have the support of my family - will they put up with the level of commitment required to make my business a success? It may mean no holiday for a while!

Check finance available to invest

Setting up a business in the UK as anywhere is a risk although franchising should minimise it you must be aware that things can go wrong and whatever you invest could be in danger and if you borrow money you may well be left with debts to repay.

You therefore need to be very comfortable with how much you invest of your own money and how much you borrow.

  • Do I have any savings that I want to invest?
  • Any capital invested in a property or elsewhere.
  • Am I able to borrow?

Research Franchising as an Option

Although buying a UK franchise is not an easy way to owning your own business, in some cases it is a lot easier than starting from scratch. For a start you can see your potential business in operation before you invest a penny.

You will be starting your business using someone else’s know-how and expertise gained over the years of running a mirror image business and on top of it you don’t have to worry about developing the system.

  • Understand how franchising works – look at specialist franchise magazines and literature. It’s a great start to familiarising yourself with the UK franchise industry.
  • Search franchising on the web – There are many website in the UK that specialise in franchising. Take advantage of all the free information and services available to you through this medium.
  • Attend UK franchise seminars accredited by the bfa - Run regionally throughout the UK these usually take place over one day, giving you the chance to hear franchisors and franchisees speak about their businesses. You also get the chance to hear the legal and financial aspects of franchising.
  • Attend UK franchise exhibitions – there are franchise exhibitions throughout the year where you can see and meet franchisors promoting their franchise opportunities.

Assess personal suitability and preferences for franchise type

It's a question of matching the skills and type of experience required to run a franchise in the UK with what you like doing, and are good at.

In many cases it's worth remembering that franchising can allow you to work in an industry where you've had no previous experience. So broadly it's the type of work that you need to identify.

Once you have found the type of work that suits you best, you can then select the franchise type that suits you.


What type of experience do you have? - Identify the skills you have developed over the years in order to ensure the franchise you choose fits your skills and experiences.

Have you managed staff? - Many franchisees are geared to a franchise employing many staff with managed skills.

Have you been involved in administration? - Many franchise systems involve extensive administration work therefore it would be beneficial to have some experience in this area.

What would you like to do and what are your strengths?

  • Do you want to work in a shop?
  • Do you want to work in an office?
  • Do you want to work on your own?

What do you enjoy the most?

  • Talking on the phone?
  • Motivating people?
  • Working with your hands?
  • Driving?

Identify suitable franchises within the right type and finance

Once you've decided on a particular franchise type, you can now narrow down the list of opportunities within that type by finance. The resultant list will show all franchise opportunities within the categories you've selected. There will be several franchise opportunities in different industries for you to consider. You then can select the industry you prefer to work in.

This process will enable you to arrive at a shortlist of business opportunities that you can start applying for.

Assess the Franchise/s

If you are buying a franchise, you are going to be working, selling and promoting the product or service for a long period of time. You can’t change or develop the product or service, so make sure that the franchise has long term appeal and its market is not threatened in any way.

It is important that the franchisor can demonstrate a clear understanding of the future market for the product or service and that you both clearly understand the following:

  • Is the market for this product / service expanding rapidly, growing slowly, static or declining?
  • Does the product / service have special features which help it to sell? Does it warrant a premium price?
  • Who would your competitors be and how competitive would your product or service be in relation to them?
  • You have looked at the general market for your product, what do you know of the local market in which you will be operating?

Check Out the Franchisors You’ve Selected

  • Is the franchisor financially sound?
  • What is the director's background?
  • What did they do previously and why did they go into franchising?
  • Does a comprehensive operations manual support the training?
  • Has the franchisor run outlets in the UK in similar areas to yours?
  • How successful is the franchisor and existing franchisees in the UK?
  • How thorough is the training at the start-up stage and thereafter?
  • How many franchises have they opened in the last 12 months in the UK and beyond?
  • How many applicants do they reject?

Confirm and Arrange Funding

It is a big step from deciding to start a franchise to actually opening your doors for business. For many, one of the biggest hurdles is approaching the bank for finance.

Banks have learnt that it can be safer to lend to franchisees of well-structured ethical franchise systems. The track record of the franchisor is most important.

For an established franchise, most of the major banks will lend up to 70% of the start up costs, for new franchises the figure will probably around 50%. Banks will normally expect the franchisee to contribute at least 30% of the highlighted ingoing cost of the franchise. This contribution should be unborrowed. With this in mind:

  • How much will you be able to borrow? Prepare a full list of your personal expenditure mortgage, hire purchase, household bills, and so on. This will show how much money you will need to take out of the business in order to live.
  • What security can you give to back up your loan? You might have a life policy with some value, or have equity in your home.
  • Start preparing your business plan - this is a vital document to obtain finance from the bank. Your chosen franchisor will often help you with this.

As part of your business plan, you will need

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