The Advantages of Franchising

Posted 20/04/2016  By: Tracy Williamson

The franchising sector has evidenced considerable growth where many other sectors have struggled during the recent downturn. From 2008 to mid-2013, whilst the UK economy shrank by 2.5%, franchising performed remarkably: revenues increased by 20%; the number of franchisee businesses set up increased by 7% and 11% more brands decide to use franchising as their means of expansion.Franchising is a substantial part of the economy contributing just under 1% of UK GDP in 2013.

Current franchise industry statistics show: £3bn per annum to the economy; 8200 business owners; 118,000+ people employed and 700 brands.

Many of the best-known high street brands in the UK use a franchise model as their means of expansion.In fact most people use the services of a franchise business each week either personally or professionally and may very well not realise this at the time.If you have a proven business model which is profitable, transferrable across different geographic areas and teachable to others you may want to seriously considering franchising as a means of expansion.

Some advantages of franchising include:

  1. Franchisees will initially pay you to join your network and use your business model and then pay you ongoing monthly fees during the term of their franchise.Your business expends without the need for you to invest more capital and employing more staff.
  2. Having the right systems and infrastructure in place are key to expansion.Provided you invest the time, capital and work into getting your model right from the beginning, then the only limitations on your expansion rate are the ability to recruit, train and fully support your franchisees.
  3. Franchisees are far more motivated and have a significant vested interest in the success of their business (your brand).
  4. Some of the UK’s biggest brands have reported a 30% upturn in store revenue when a company-owned outlet is converted to a franchised one.

    Encouraging franchisees to share and contribute their ideas for the success of the brand can prove successful.For example, the Big Mac was invented by a franchisee, and that’s been fairly beneficial to McDonald’s!

    Franchisees can support one another, share ideas and act as sounding boards.This leads to growth and more profit for all concerned. Being a business owner can be lonely and isolating at times and knowing there are others around to call on can be reassuring.

One very important thing to remember is that franchising is not a tool to fix a bad business it is a model that should be used to replicate a successful and proven business.It should not be regarded as a means of sourcing income from other people; and requires significant financial investment and time at the outset to get the model set up correctly for future growth.

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