Franchising basics
A business format franchise is where the franchisor grants permission, by way of a franchise agreement, for a franchisee to use the brand, intellectual property (knowhow), products and services of the franchisor, to operate their own business as a clone of the franchisor’s business.
The franchisor provides training and support to the franchisee, together with the systems and procedures for running the business, and the operating manuals containing the detail and specifics of the concept. In exchange, the franchisee pays a franchise fee, which will include the licence to operate under the brand, and a package of training, equipment, stock (where applicable), software etc, required to launch the business.The franchisor will be looking to recruit franchisees that match an ideal profile, with relevant skills, experience, funding capabilities
The franchisor will be looking to recruit franchisees that match an ideal profile, with relevant skills, experience, funding capabilities and interest in the concept. A good franchisor will have strict criteria on what type of person they are looking for and will only recruit those individuals who have the right skills and attitude into their network.
The prospective franchisee will be comparing the various franchise offerings, and trying to narrow down the huge array of choice available amongst the 897 business format franchises currently active in the UK. They should be considering which franchises are in their price range, those which interest them, and which they feel they have the skills to be successful in. There are some very well-established franchises in the UK marketplace — with many existing franchisees. It is often considered ‘safe’ to join one of these established brands.
Prospective franchisees, however, should not overlook the younger franchise brands. There is a whole host of franchise offerings that have a really solid foundation, and have been trading successfully for many years, and that may have made a relatively recent decision to expand their business by franchising.
There is also a significant number of niche market franchisors whose business opportunity may be prompted by change to legislation which has opened up a new, lucrative opportunity, or by market trends opening new doors and avenues of business. The franchise industry has been expanding year on year since the first franchise opened its doors in the UK in the 1950s. Franchising now contributes £12.3 billion to the UK economy, and employs over half a million people.
Where many small businesses have failed over the last few years, franchising has succeeded. The help and support of an experienced business owner can be invaluable to a new franchisee — no matter if you are the first, or the one-hundred-and-first franchisee in the network.
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