For many women, building their own business from scratch is a dream come true. It will have taken years of blood, sweat and tears to make it a success and one day, they’ll will sit back and think, ‘it’s time to expand’, and that’s where franchising could come in.
What is franchising?
Put simply, franchising is when the owner of the original business (the franchisor), sells a license to someone else (the franchisee) to operate and run an exact replica of their business in another location.
The franchisee will pay the franchisor an initial fee to purchase the franchise license, plus an ongoing monthly fee, usually a percentage of their profits.
In return the franchisor will teach them exactly how to run the business. They’ll share every tip, trick and method they’ve learned since opening the doors. They’ll share their branding, website, marketing materials, suppliers, sales and CRM software and will guide them through every stage of their business journey, from the day they start to the day they leave.
Examples of well-known high street franchises are McDonalds, Boots Opticians, Subway, German Donner Kebab, Dominoes Pizzas etc. Unbeknownst to many, most of these stores are owned by franchisees, all following a franchise model.
Top Franchising Facts
Even though you may not be familiar with franchising, it is a highly successful business model, as reflected in our last National Franchise Survey (a new one is due out in January 2024.) The franchising industry contributes £17.2 billion per annum to UK GDP, employs 710,000 people, with 93% of franchisees claiming profitability and less than 1% of franchisors closing per year due to commercial failure.
Why franchise rather than simply expand?
Probably the most attractive reason to franchise is the shared risk and costs, motivated management and strong brand retention. If you were to open up a new store or office, you’d be responsible for a the premises, employing staff and building up a new clientele, plus the day to day running of the business. When you franchise your business, your franchisee is responsible for all the above, with your help of course.
‘Skin in the game’ – the ultimate motivation
Franchisees, who have paid many thousands of pounds to buy their license have ‘skin in the game’ and it is in their best interest to make things work. This isn’t just a job to them, it’s their business that they want to see it succeed. Ultimately, franchisees don’t call in sick on a Monday morning.
Faster expansion
Organic growth for any business can be hard but when you franchise your business you fast forward the process. It is not unusual for a franchisor to take on 10 + new franchisees a year; organic growth would struggle to compete with that.
Brand recognition
As you begin to recruit new franchisees, so your brand recognition grows. From the north of Scotland to the southernmost tip of Cornwall, your brand will become known across the country and importantly, you can keep a tight control of how the businesses are run and that brand standards are being maintained. Your franchises will be owned and run by local people, with local knowledge, who want to bring your product or service to their hometown, whilst also building themselves an ethical, professional, sustainable business.
The power of a network
If you encourage good communication, your franchisees soon will bond together and become a powerful network, a source of support for each other. In due course new ideas and innovations will evolve through the network and, although it is important to ‘stick to the franchise model’ a good franchisor will always keep one ear open for new ideas that might benefit the entire network.
Economies of Scale
Franchisors can take advantage of strong negotiating positions when buying on behalf of their expanding networks with suppliers and other stakeholders.
Who are the BFA?
The BFA are the largest and oldest franchise membership association in the UK. Formed in 1977 we now represent over 300 franchisors, many of whom we helped to franchise their businesses. We hold regular seminars on the subject and would invite you to visit our website. https://www.thebfa.org/grow-my-business/ to find out more.
