February 22, 2019

Franchising: An alternative route into business?

GSM London students hearing from McDonald’s franchise owner John King

Like the idea of running your own business but don’t have the appetite to build your own from scratch? Over 600 businesses in the UK offer franchise licences with many costing less than the price of a Masters course. Franchises can provide the ideal mechanism to build business knowledge and build a business with an established brand.

A franchise is a licence to operate an existing business enterprise. Often a customer may not be aware they are buying from a franchise because the branding, premises design and product is identical to the brand’s own stores. From McDonalds and Starbucks to Neds Noodle Bars, CEX to Riverford Organic – all operate franchise systems.

And that is why franchising can be attractive. You don’t have to have your own business idea but rather tap into an existing brand and market. The Franchiser should offer ongoing support and exclusivity within your area. Many will provide market intelligence, training, marketing and bulk buying. This support can be vital to ensuring the success of the business.

But of course this support and the brand will cost money. Many franchises will cost more than £50,000 even before premises and may well be out of reach for recent graduates. However there are many that cost less that £10,000 and could be a great stepping stone to developing skills and trying your hand at business.

But this is not an advertorial for franchising. There are many negatives that have to be considered. One of the biggest complaints is that the level of support given is not as high as expected. Some owners complain that whilst they have to ensure their business complies strictly to the company guidelines, they don’t benefit as much from the marketing and brand development that they had hoped. Franchises can also restrict your business creativity. You may not have the power to source alternative suppliers, market yourself differently or diversify your product range. And if that wasn’t enough, there is no guarantee that your business will be a success (and failure will typically result in your license being revoked).

And yet despite these negatives, thousands of people build their careers through a franchise. Walk down your local high street and think about how many of the shop fronts are hiding a franchise behind. The British & International Franchise Exhibition takes place annually and offers visitors the chance to speak directly with Franchisors and attend seminars from industry professionals, financial backers and current franchisees. But remember, this is the franchise industry marketing themselves and their products to you – you need to be savvy and always consider professional and legal advice before committing to any business franchise.

Find out more information about Franchising.

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