What is Franchising?

 Franchising is one of the most powerful business models in the world, offering entrepreneurs the chance to own their own business with the support of an established brand. Whether you’re an aspiring business owner looking for a proven path to success or a company considering expansion, franchising provides a structured way to scale, grow, and thrive. But what exactly does it mean to franchise a business? In this blog, we’ll break down the fundamentals of franchising, explore how it works, and help you decide if it’s the right move for your future.

Franchising is a simple concept. It is a business system which is already proven successful and has been developed into a framework for others to replicate, and grow their own business. In this business model one party, known as the franchisor, grants another independent party, known as the franchisee, the right to operate a business using the franchisor’s brand, business model, products, and services. In essence, it’s a method of expanding a business without the franchisor needing to manage and operate each individual location themselves. Did you know? Franchises exist all over the UK in a range of sectors and industries. From HR to accountancy; from car charging to cleaning and maintenance; from kids services to adult care; from hospitality to property from printing and publishing to delivery services; from personal coaching to health and fitness, an everything in between! You may recognise popular high street names such as McDonald’s, Costa, Starbucks and Pizza Hut, even Co-Op.  

What advantages are there to franchising?

For a franchisee:

As a franchisee, you get the best of both worlds—the freedom of running your own business with the backing of an established brand. Here are some of the key benefits of franchising:

Benefit one: A low risk investment

Franchising offers a supportive environment where you, as a potential investor or franchisee, will not feel the pressure of setting-up a business by yourself. You can follow a proven business model, and gain advice from your franchisor on what steps and processes to follow. Franchising offers you the security of managing your own business, under the umbrella of an established brand.
There are hundreds of tried-and-tested business models across all industries, so whatever your interest, background or skills, you can find the right one for you. Franchising also has a proven success rate, with over 95% of franchisees still operating after five years, compared to just 5% of start-up businesses.

Benefit two: The right business opportunities for you

Having the mind-set for success combined with investing in your ideal franchise, is a winning formula. Whether you’re a trained accountant, or didn’t do too well at school; whether you love people, animals, or gadgets; whether you want to work from home, employ an office team, be active, or be out on the road, there’s a business model for you. And because franchisors give training in all aspects of running a franchise, you’ll grow a business you’re proud of, with their support.
You can choose to be as involved in the business as you want: hands-on, less involved in the day-to-day but focused on growth strategy, or anything in between. If you have the creative ambition then follow your passion! Don’t let your anxieties or ‘what if’s’ hold you back!

Benefit three: In business for yourself, but not by yourself

Many women enjoy being with people like them; we feel a sense of community. So, being a business owner shouldn’t make you feel alone. Being a franchisee gives you access to business owners who understand what running a business like yours entails. They can offer the emotional backing which tends to inspire, rather than hinder, female entrepreneurs. Your franchisor, and the rest of the network, are there to guide you along the way, offering advice from anything including dealing with marketing, and customer issues, as well as training and acquiring new skills. The franchise world is full of advice and budding entrepreneurs, like yourself, who are eager to support your journey. Any questions you have regarding loans, legalities, business premises and operations will be provided by franchising specialists, who can help make informed decisions, and guide you in your franchise journey.

For the franchisor:

If you’ve built a successful business and are looking to scale, franchising can be a highly effective way to expand without the risks and costs of opening multiple locations yourself. Here’s why franchising might be the best growth strategy for your business:

Benefit one: Shared financial risk

Substantial investment would be required to open multiple corporate units. As a franchise, your franchisees are the ones who are committed to opening new units, supported by you, so you grow much more quickly. This enables you to meet increasing demand, through the franchise network, and increases the brand value; not just where you’re based. But, wherever your franchise is in operation.

Benefit 2: A business savvy driven partner

As a franchisor, you’ll identify the ideal profile of someone you’d like to see franchising your business; with careful target marketing, you’ll soon attract the right investor. Often franchisees have their own experiences which can prove to be valuable to the evolution of your brand. For example, the McDonald’s “Big Mac” and “Drive-Thru” were both ideas which came from a franchisee.

Benefit 3: Collective ambition

The main advantage of franchising is having a shared goal. When choosing prospective franchisees you’ll want to select people who align to your brand’s overall mission, vision and values. Then both you and your franchisees will be committed to seeing the brand’s growth, social impact and client satisfaction. A burden shared… is a burden halved – and you have fun on your new path, together. If you aren’t certain about the genuine benefits of franchising, now is definitely the right time to speak to any of us within the franchise
industry, and see for yourself what you can achieve.

Breaking down franchise terminology

Here are some terms you might be familiar with and there definitions…

• Franchisor: The franchisor is someone who has developed a successful business concept, brand, and operating model. They have a proven track record and want to expand their business to new locations or markets.
• Franchisee: The franchisee is an individual, partnership or company who buys the rights to operate a business using the franchisor’s brand, business model, training and support. They typically pay an initial franchise fee and ongoing royalties or fees to the franchisor.
• Franchise Agreement: This is the legal contract between the franchisor and the franchisee. It outlines the terms and conditions of the franchise relationship, including details about fees, responsibilities, operational guidelines, training, support, and more.
• Initial Investment: The franchisee usually pays an initial franchise fee, which grants them the right to use the franchisor’s brand and business model. Additionally, they need to cover the costs of setting up in their chosen business location, purchasing equipment, and hiring staff.
• Ongoing Fees: Franchisees often pay ongoing royalties or fees to the franchisor, typically based on a percentage of their revenue. In exchange, franchisees receive ongoing support, branding, marketing, and access to the franchisor’s established systems.
• Support and Training: Franchisors provide training and ongoing support to help franchisees operate their businesses successfully. This can include initial training, operational guidance, marketing assistance, and more.
• Brand Consistency: One of the key benefits of franchising is maintaining brand and service consistency across different locations. Customers can expect the same quality of products and services regardless of the franchise location they visit.
• Expansion: Franchising allows the franchisor to expand their brand and business presence quickly, often into areas they might not have been able to reach on their own. It also allows franchisees to grow their business into other territories, by investing in more areas within the franchise – over 33% of franchisees[1] own multiple units or multiple brands.

What franchising opportunities exist?

Franchising exists in almost every sector you can think of, including fast food, retail, hospitality, fitness, education, accountancy and more. As an industry, franchising is worth over £17billion to the UK economy[2].

Whilst it offers numerous advantages such as reduced risk for franchisees due to the established brand and business model, there are other challenges to consider, such as the loss of full operational control and the potential for conflicts between franchisors and franchisees.

This is why it’s essential for you to thoroughly research what opportunities are out there for you, carry out due diligence to make sure you’re happy with the brand you’re looking to invest in, and seek guidance to fully understand the terms of the franchise agreement before entering into any kind of business arrangement.

Next steps

If you’re looking for more advice on whether franchising is the right path for you, please contact us. We’ll connect you with an EWiF mentor, who will offer personal insight, so you gain a richer understanding about how to fulfil your dream through franchising.

[1] 2018 bfa NatWest Franchise Landscape report

[2] 2018 bfa NatWest Franchise Landscape report

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