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Taking up a Franchise - great franchise business ideas
Buying a franchise - find a franchise loan
Is now a good time to buy a franchise?
With the current economic uncertainty, it's certainly important to consider any new business investment carefully.
But if you choose the right franchise, you can buck the downward trend even in a recession. It's just a case of choosing the right product or service. For example, pizza franchises are reporting increased business as customers order-in pizza rather than go out to expensive restaurants.
Chose the right franchise and with a lot of hard work and the right breaks, you could have a lot more financial security than most employees.
What does buying a franchise include?
When you buy a franchise, you are buying the right to use an existing
business format. This can include a brand i.e. the look of the business,
logos, trademarks, etc. as well as help with setting up and trading
Training you to run the business, Finding a suitable site for the business, Design and layout of the premises, Putting business systems in place i.e management structure, stock control, staff hiring, Promoting the business through advertising and marketing, Advice and help through all phases of the business.
How do I finance a franchise?
The methods of purchasing a francise vary but most involve an up-front payment and an ongoing fee. If you're thinking about buying a franchise, it's essential that you have access to adequate levels of finance both for the initial purchase and for cash flow during the start-up period, so it's worth looking at a franchise loan.
Business lenders and banks have access to thousands of packages and rates and can find the best business loan to suit you and your business. There should be no obligation and the service is generally free.
What is a Franchise?
A franchise is a business just like any other, however rather than starting a business from scratch the new business owner or 'franchisee' buys a business format from an existing successful model. For example, let's say you want to open a pizza delivery business in your town.
You need to learn how to cook pizzas, rent or buy a shop and fit it out, find out where you buy the ingredients, source a pizza oven, employ staff and train them, get menus, leaflets and flyers printed and distributed, arrange deliveries and generally run the business.
You can either learn to do all this by yourself with the attendant risk and delay, or you can get expert help and support from someone who has helped start not one, but dozens or even hundreds of pizza outlets - the franchisor. He will have run across almost every problem you are likely to experience and will be able to train you and advise on all aspects of the business. In addition, you will be using the franchisors brand - something that he has spent large sums of money and many years promoting.
Taking up a franchise is becoming popular to more and more people due to the present difficult economic climate. As government and private sector employers continue to make cut-backs and redundancies, the idea of becoming your own own boss can be very appealing.
The big advantage is that by purchasing a franchise you get an up-and-working business model that has already been marketed - maybe a well-known brand or trademark to use and a training and support programme. All of which makes it more likely that your new business will succeed. The franchise idea you choose should have been tried and tested and be ready to start making you money.
Buying a franchise is a way of starting your own business with the support of a company that has experience and customer loyalty, if well chosen, and this can greatly improve the chances of your business succeeding.
A franchise is a business like any other, but it is one based on a tried and tested model that you can buy into
In return for your franchise business you'll need to pay a combination of an up-front payment, monthly fee and/or a percentage of profits, and/or renewal fees. You may also have to purchase some or all of your stock from the franchisor. The franchisor has already set up the business in another area and hopefully ironed out all the difficulties and proved that their business model works. They will have developed the business and will have trademarks, logos and branding that you can capitalise on.
They may run national advertising on TV, in newspapers and magazines or online, and they may supply you with customers or enquiries, or help you generate leads. If you haven't investigated franchising before, you'll be surprised at how many well known and high street names are franchises.
The help you receive in setting up will depend on the type of franchise, but a franchisor might assist with any or all of the following: raising finance, choosing premises, training, recruitment, PR and marketing.
Caveat Emptor 'Let the buyer beware' - what to look for when buying a franchise
As with any business opportunity, you need to look very carefully before you commit yourself to a franchise.
Always, always, always take independent professional advice from a solicitor (preferably one that specialises in franchise work) and an accountant before investing. A few hundreds spent on professional fees before you sign up can save you many thousands later on.
This list is by no means comprehensive, but it does contain a few 'must do's' when investigating a possible franchise business (or indeed any business opportunity).
Questions to ask yourself before you take up a franchise
Why a franchise? Could you set up the business as well under your own steam? Is the market expanding, static, shrinking? What about the competition?
Is the franchisor sound financially? How supportive are they once they've had your fee? Do carefully research - Google them - then Google them again with their name followed by 'sucks' in the query box - you'll be amazed at what this can reveal!
Get their accounts from Companies house and get your accountant to take a look at them.
How are other franchisees performing? Don't take the franchisor's word, talk to franchisees in private.
Don't rely on franchisees suggested by the franchisor, instead find out where other franchisees are based and be your own investigator. Take time and watch their business - are they getting enough customers? Purchase from them incognito, send mystery shoppers in, and talk to their customers.
Find out if the cost of the franchise has gone up or down, and if so
why is this? Are they happpy with support and training? Are they getting
a good deal on advertising? Are they making money?
Who are the competition? Is the market expanding or shrinking? What exclusivity will you have?
What if you don't hit the cash-flow projections by 10%, 20%, 50%? What if you get sick?
What if your business fails? What if the franchisor goes bust?
Conversely - what if your franchise performs well and you want to sell it / lease it / give it to your kids? What is your exit strategy? How much will the franchisor want to transfer or renew the franchise?
Franchise exhibitions and seminars take place regularly around the country, and it's always worth going along to these as you can pick up a lot of useful ideas and information which can help ensure you make the right choice.
Finally another reminder - always take professional advice before you sign up to a franchise.
It's all too easy to look at new business opportunities through rose-tinted glasses. Input from an accountant, solicitor, business bank manager and even friends and family can highlight potential problems and pitfalls you may have missed. Google to find professionals who specialise in dealing with franchises.
Good advice from a solicitor or accountant who knows the franchise market can be worth its weight in gold!
The range of business types available to the potential franchisor is huge and growing all the time. Some of the more popular franchise options are shown below:
Accountancy | Financial services | Book keeping
Business consulting and training | Coaching and Personal Development | Business cost reduction
Care - Domiciliary care | Nursing care | Domestic services |
Car alloy wheel refurbishment | Car dent and paint repair | Car repairs | Car windscreen repair
Cleaning - Carpet cleaning | Commercial cleaning | Domestic cleaning | Oven cleaning
Childrens services - Nurseries | Fitness| Education | Gifts
Computer repair | Web design
Courier services | Mail deliveries
Dating - Speed dating | Matchmaking
Education - Nurseries | Tutoring
Estate agency | Estate agents boards | Property lettings | Overseas property agent
Food - Fast food | Sandwich bar | Health food | Coffee outlet | Juice bars | Frozen yoghurt | Milkshakes
Fitness Training | Gyms | Slimming clubs
Garden Maintenance | Lawn care | Pest control
Home Improvement | Bathroom and Kitchen | Conservatories | Loft extensions
Marketing | Signs | Leaflet and directory
Pet care - Pet Food | Grooming | Pet sitting | Dog walking | Dog training | Kennels
Printing | Vehicle graphics | Vinyl signs | Screen printing
Retailing and merchandising | Confectionery | Greetings cards | Perfumes
Training | Tuition
Travel - Discount hotels | Travel brokers | International holiday estate agent
Vending machines - Coffee | Crepes | Health food | Water cooler| Sweets | Greetings cards|
Window repair | Auto windscreen replacement and chip repair | Business repair
More information (external links - open in new window)