Franchising in the UK

    June 27, 2006

There are more than 600 franchise opportunities available in the UK . Franchising is simply a method of marketing goods or services under licence.

The owner of the business brand(The Franchisor) grants a licence for a company or individual to operate using their proven system or method and name to market goods or services. The process creates, what is known as a “Business Format Franchise” and is the most prominent form of franchising in the UK, in fact, so common that most high street shops operate under a UK franchise license, without you even knowing it! Here are a few names you may recognise;

Domino’s Pizza Toni & Guy Post Office(Ltd) Cash Converters Vision Express Clarks Shoes What to you get when you buy a franchise?

When you purchase a franchise you pay a franchise or initial fee in exchange for a franchise pack. Every franchise pack will vary from franchisor to franchisor but generally the franchise pack will include;

Use of the brand name & any logo Franchise operating manual detailing the method used to set-up and run the business Induction training Tools/equipment/stock if applicable Initial stationery & literature Ongoing training & support National marketing Exclusive territory

For the above & ongoing support the purchaser of the franchise(the franchisee) will pay an ongoing management fee to the franchisor, which is often based on a percentage of the franchise turnover.

Why would someone consider franchising?

Business Skills & Experience

Whilst there are some huge national and multi national brands in franchising individual franchisee operations effectively run as a small business with the ongoing support of the franchisor. In our opinion this lends itself perfectly to many provided they have the knowledge and determination required to make a new venture a success.

Change of direction

Because all franchises generally have extensive training and support packages for franchisee’s it is a great way to start a new career direction whilst still being your own boss.

Becoming part of something bigger

Another major benefit of being part of a franchise network is that you should receive support from both your franchisor and your fellow franchisee’s. Many franchisor’s will for example arrange staff cover in the event of illness or unplanned leave for franchisee’s so the business can remain trading.

Creating an asset

Often the problem with setting up and running your own business is that effectively YOU are the business. This means that when you come to sell the business unless you have tangible assets or contracts that will guarantee the new owner revenue the value of the business will be seriously effected and can lead to poor sale values. The advantage of having your own business within a franchise network is that the support via the franchisor will continue after you have left the business giving more comfort to a buyer and a better return on your investment. The sale of an existing franchise is known as a “franchise resale” and all good franchisors have very well defined strategies to deal with this to maximise your return and allowing a far smoother and faster sale.

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