Hello! I wanted to write a blog post on the topic of ‘What is a Franchise?’

My reasoning behind this is if you have some money to invest in a business, you may be considering the option of a franchise, but many people do not know exactly how they work, or whether they should be investing money into a franchise opportunity or into their own venture.

What is a Franchise?

A franchise is a business opportunity you can purchase. Many huge businesses such as McDonald’s offer franchise opportunities.

In short you pay a fee and in return you are given a business ‘in a box’

However, if the franchise is a physical store, such as a shop or food chain, then you would need to spend additional funds on securing a building etc, so you don’t always get everything you need within the business package.

Much of the time the company would help you select suitable premises etc, so if you are thinking of going down this route don’t let that put you off.

What Are the Benefits of Buying a Franchise?

There are a lot of positives to buying a franchise, the main one of these benefits is the brand name that comes with it. Some brand names will rarely fail, such as Mcdonalds, and so you are highly likely to be paying out for a successful business if you select the right franchise.

When a brand name is already well established you can pretty much expect custom from day one, you’re not battling trying to get your name known.

Another main benefit of buying a franchise is the support you will receive from the company. The company (if good) should support you in most of the tasks when you’re setting up including choosing premises, ordering supplies, training etc.

You will usually get access to the company’s systems which have been tested and proven to be successful, this includes everything from IT systems, HR, Training, Health and Safety, Procedures, Operations etc. This saves an awful lot of headaches when you are starting out.

What are the Negative’s of Buying a Franchise?

One of the biggest negatives of buying a franchise is the cost.

It’s not unusual for franchises to be sold for 250,000 GBP (there are cheaper ones available), it’s a lot of money to invest, and if you were to invest that kind of money into starting your own business, then think about what that could buy you.

Yes, it would take you longer to build up your brand name, but that money could reduce your outgoings instantly, as you could use it to buy premises, or fund your set up.

Some franchise companies even take a monthly percentage of your takings as well as the upfront fee. So it’s very important to do your research before entering into this kind of business.

What does an average business in your chosen franchise earn per month? How long have the company been active? Do they have statistics you can look at?

Another negative of franchises is that you are restricted to a limited number of businesses.

If you chose to start your own business, you could go into anything, from making pet collars to dusters, the only limit is your imagination. However, there are only limited franchises available, and you also have to stick to their way of running things, which means you lose some creative control of your business.

Many franchises will even insist on pre-approving your marketing materials before you put them out. So you really can end up restricted in what you can do.

Another factor to consider is growth. Many franchises will require you to purchase a second license to open a second store, and so that can be limiting for your business growth.

Franchise or Start Up?

Well, this is very individual. For me, I would always choose to start my own business and retain complete control over what happens in it.

However, some people aren’t very creative or may like the fact that they are just told how to run their business to make it successful, for these people, a franchise could be a good option.

On the flip side of that, if you create a successful business from scratch, you could even franchise out your own business! The companies at the top are doing very well!

The best thing to do is to start and take a look around at franchises that are currently available. Get an idea for what niches you could go into, and how much the franchises in those niches are.

Research is very important when starting any business and a franchise is no different.

This site is great for listing franchises currently available. Just select your country at the top and take a look at what opportunities are available. http://us.businessesforsale.com/

I hope you have enjoyed this little insight into ‘What is a Franchise’

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