Franchising
- What are the benefits?
Franchising
first became a recognised force in the UK during the 1970's
According
to the 2004 survey carried out by the NatWest Bank and the British
Franchise Association, the overall turnover of the franchising
industry last year is estimated at £9.65 billion, with the number
of business format franchising systems growing to 665 an increase
of 3.6%.
The
27,000 individual franchised units in the UK are growing to
give total employment in the sector of more than 330,000. This
makes franchising larger than the whole energy sector and almost
as big as the whole of the armed forces.
So
lets have a look at the benefits of franchising:
Better
Chance of success
Government
research has over
the years shown that of all businesses starting today, only
20% will still be trading in 5 years time. With franchising
these figures are reversed. The reason for this represents the
other benefits of franchising.
Buying
Into A Proven Business System
With franchising
you are buying into a business that is already operating. The
Franchisor will have made mistakes along the way and will have
learnt from them. This knowledge is passed on as part of the
franchise system. It enables you to start your business at a
much higher point on the learning curve. By reducing the learning
curve you will also reduce the time it takes to start making
profits.
As
part of your franchise purchase you will be provided with an
operations manual which will provide the operating system for
your business. It is based on the best practice to enable you
to get off to a flying start. The majority of day to day problems
will be covered and for those problems that aren't your franchisor
will normally be able to help.
Support
Within a franchise
there is or should be a great deal of help and support available.
The support that you will need will change as your business
grows. From day one you will need training and will be reliant
on the Franchisor. This will take various forms but will include
product training, the business system, marketing and assistance
in setting up accounting systems.
As
you become established, you will benefit from different types
of support such as staff training and National account business.
It may well be possible to collaborate with other franchisees
on larger projects and just being part of a larger organisation
can help. Most franchisors will hold regular ongoing franchisee
meetings which are a great opportunity to benefit from the experiences
of other franchisees and update product information.
An
Established Brand
You do not have to
buy a McDonalds or a Body Shop franchise to buy a franchise
that is established in the market in which it operates.
An
established brand, proven systems and a respected business name
will give you a head start in getting your business off the
ground and will attract customers from day one.
Accessibility
of Finance
As a franchisee, you will benefit from the track record
that the franchise as a whole has established. The banks will
be able to make a more informed lending decision and the Franchisor
may well have arranged a finance package. The entrepreneur trying
to start a business will find finance more difficult to arrange
and any finance will often be on less favorable terms.
Business
Reviews and Business Planning
Many Franchisor's
will hold review meetings with you to discuss all aspects of
the business. You will be able to check your progress, celebrate
your successes and plan for the future. One of the major reasons
for business failure in the past has been due to lack of good
business advice.
Buying
Power and Research
When you are building a business
it is difficult to be able to spare time on product research.
As
part of a franchise network much of the product research and
testing process will be carried out for you. It is also possible
to take advantage of group buying discounts and better terms
from suppliers.
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