A franchise lets a business owner expand by granting others the rights to use their brand and operating model. The franchisor creates the concept and the franchisee invests to open a branch. This setup can speed up growth and lower the risks usually associated with starting a new venture. However, before pursuing this path, a business owner must confirm their concept can be replicated elsewhere.
Is Your Business Ready for Franchising?
Not every company is built to be franchised. A business must be easily transferable to new locations. The owner should be able to teach someone else the core processes in a reasonable amount of time. There must also be enough profit to cover a monthly service fee, which is typically around 10 per cent of turnover. A franchise consultant can run a feasibility test to check if these conditions are met.
Pip Wilkins, chief executive of the British Franchise Association, notes that identifying which parts of the operation can be taught is often the hardest part of the process. The consultant will also verify that the business model generates enough income to support the ongoing fees. Choosing the right consultant is critical; Wilkins suggests the relationship should feel like a partnership where the consultant genuinely understands the business.
Before launching, the business owner must protect their intellectual property. Registering a trademark is essential. The government website charges £205 for one class and £60 for each additional class. This step prevents others from using the brand name or logo without permission.
Next, the owner needs a solid operations manual. This document acts as the system’s guide, covering sales, marketing, and finance. The franchise agreement, which typically costs between £3,000 and £6,000, defines the rights and obligations of both parties. The owner should also prepare a support package for new franchisees, including training materials and ongoing assistance.
Once the brand is ready, the owner should join the British Franchise Association. This organization connects franchisors to share best practices on recruitment and monitoring. The accreditation process helps ensure the business meets industry standards.
Launching and Growing the Network
When recruiting, the owner should start small to test the model. Most franchisors begin with five franchisees in the first year before scaling up to about a dozen annually. This slow approach allows the owner to monitor performance and provide better support. Screening is rigorous, often involving an information day, interviews, and financial checks.
Legal costs are part of the upfront investment. Rachel Stewart, managing director of Barking Mad, estimates an initial investment of £25,000 to get the necessary documents in place. This covers legal work for agreements and support for marketing materials. The speed of expansion depends on how much work the owner does themselves versus hiring a consultant.
Samantha Wingfield-Jones, a franchisee of Razzamataz, highlights the value of this support. She received two weeks of intensive training followed by meetings, which helped her launch quickly after her first meeting in January 2021. The existing infrastructure, such as websites and uniform designs, simplifies the process for new owners. This level of structure is a major reason why many prefer franchising over starting independently.
Benefits of Franchising
Franchising can be a lower-risk strategy for franchisees, as they don’t have to start from scratch. The failure rate for franchises is significantly lower than for independent start-ups, with less than five per cent failing over the past 20 years. Franchisees also tend to be more loyal to the brand, as they are invested in its success.
According to Franchise Direct, the UK franchise industry has a net worth of £17.2bn and creates 710,000 jobs annually. A significant 93 per cent of franchise businesses are profitable, with 60 per cent having a turnover of more than £250,000. This suggests that franchising can be a successful and profitable way to grow a business.
