Why franchising

Why spend money on a franchise when you can start your own business? Franchise expert Peter Williams weighs up the pros and cons

"Why should I spend money on a franchise when I could start up my own business from scratch?" This is a fair question I have often been asked and I believe it is sometimes assumed that as a franchise consultant I will automatically come down in favour of the former. Not so! I would never suggest that franchising is the remedy that provides the answer to everyone's ambitions, any more than I would recommend the ‘go it alone' direction to those who want to minimise risk.

The issue is highly subjective and it depends on individual aspirations, attitudes and inclinations; so let us consider three examples.

1. There are those who are highly entrepreneurial, essentially of free spirit and prepared to take a gamble, sometimes even preferring to exploit a mere idea rather than a commercially-proven opportunity. They usually want to do things all their own way, developing products or services and promoting the venture by formulating their own sales and marketing strategy. In my experience, such individuals might do well not to become franchisees. They could feel uncomfortable in being expected to follow the systems and procedures every good franchise is built on and, quite simply, find it difficult to conform with the obligations expected of them. 

As totally independent operators they may be exposed to all kinds of obstacles to their progress that will undoubtedly cause many to fail, especially during an economic downturn. But those who achieve success could actually become part of the franchise industry - but not as a franchisee. For them, becoming a franchisor might be far more appropriate.

2. At the other end of the spectrum are the extremely cautious who are not as confident in their own abilities or experienced in business.

Some years ago, following a seminar at a National Franchise Exhibition, I was approached by a visitor who was extremely miffed because no franchisor would actually guarantee his success. I explained at some length that in a franchise relationship, personal input of effort on the part of a franchisee is always paramount if a favourable performance is to be achieved. However he wasn't impressed and I very much doubt whether he had the aptitude for business at all, franchised or otherwise.

3. The third and final group is comprised of enterprising people whose ambitions are tempered with prudence. While their objective is to break out of a rut and go into business, the likelihood of success is a vital factor in the decision-making process.

In this regard, UK franchising - with its healthy track record of low failure rates - can justifiably claim to offer significant advantages over the ‘stand alone' route into business. There is certainly no mystique, it's all to do with a good business that expands by way of effectively training and supporting capable people - the franchisees - who aim to create their own success by replicating a proven model. In practical terms, it can be expected that this will extend to every aspect of the operation, including equipment, stock, vehicles, administration, sales and marketing, and so on, with many franchisors priding themselves on the comprehensiveness of their packages.

To summarise, provided the necessary personal qualities are in place: namely ambition, diligence and willingness to adopt well-established procedures, money spent on a franchise can indeed produce a better return than a ‘stand alone' option - and accomplish a less stressful lifestyle into the bargain.

Peter Williams

Franchise consultant Peter Williams is an affiliated professional advisor with the British Franchise Association.

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