Franchising has been a reliable business strategy for ages. It’s a smart way to give your personal brand wings, letting you expand into new markets. And guess what? If you are a new entrepreneur in the UK, this strategy won’t cost you an arm or a leg.
Currently, the franchise scene across the UK is hosting over 48,000 units. This includes both homegrown and international brands.
The growth is quite visible in the personal services and hotel and catering sectors. Over the last decade, franchises in personal services have more than doubled, and those in hotel and catering have increased by 55%. Now, such sectors account for 60% of all franchise units, up significantly from 40% in 2008, showcasing an interest in the franchising landscape.
But before getting into your franchise journey, there are some essential steps you’ll need to manage.
This article will guide you through everything required to start a franchise. So, just follow through and get your franchise off the ground successfully.
What is a Franchise?
A franchise operates as a licence that gives the franchisee the right to use the franchisor’s unique business trademarks, knowledge, and processes. This allows the franchisee to market products or services under the franchisor’s brand name.
As part of this agreement, the franchisee is typically required to pay an upfront start-up fee. Then, there are also yearly licensing fees that keep coming as long as you’re in the game.
Why start a Franchise?
Opting for a franchise means you’re setting up a business with a brand that’s already well-known, along with their tried-and-tested ways of doing business. This can make things a bit smoother when starting out. However, starting a franchise isn’t necessarily simple.
When you start a franchise, part of what you earn will need to be paid back to the franchisor as royalties, so you’ll need to factor this into your budget. You’ll also have to stick closely to the franchisor’s set standards without much room for tweaks. This can be a bit restrictive, especially if you’re someone who likes to steer things your own way.
What are the Initial Costs of Starting a Franchise in the UK?
The initial cost of starting a franchise in the UK can vary depending on the brand and the type of franchise. On average, the setup cost is estimated to be around £40,000.
This estimate includes the initial franchise fee, which can range from a few thousand pounds to over a million for high-profile franchises. The fee typically covers the rights to use the franchisor’s brand, business model, and support services.
For specific examples, the total initial investment for highly recognized brands like McDonald’s can range from £500,000 to £1.85 million, including the franchise fee and equipment costs. Meanwhile, more accessible franchise options like Dream Doors require about £35,000 in liquid start-up capital.
It’s important to also consider additional financial commitments such as equipment, initial stock, premises rental, marketing, and working capital to support the business until it becomes profitable. Each franchisor will provide detailed financial breakdowns, which should be carefully reviewed to understand the full scope of the investment required.
Types of Franchises in the UK
The UK’s franchise scene is a vibrant marketplace, brimming with choices that cater to every taste and budget. Here’s a quick tour of the franchise bazaar where entrepreneurs can shop around when starting a franchise:
- Food and beverage: Renowned for its broad appeal, this category includes brands like Double Bubble and Wing Kingz, which are known for their strong brand presence and proven business strategies.
- Retail: Franchises such as CeX, which operates in the second-hand electronics and entertainment market, offer entrepreneurs a chance to benefit from established brand loyalty and customer bases.
- Automotive services: Franchises like ChipsAway offer services like minor vehicle paint repairs, appealing due to their lower initial investment and consistent demand.
- Property investment: This sector is attractive for its substantial support network and potential for growth, appealing to those new to the property market.
- Technology and innovation: As technology becomes ever more integral to daily life, franchises that provide essential tech services, like cybersecurity and device repair, are increasingly popular.
- Health and fitness: Brands like Anytime Fitness, which provide round-the-clock gym services, cater to the growing health-conscious population. They require a significant initial investment but offer robust returns through brand recognition and a solid operational model.
- Child education and services: Educational franchises such as Kumon appeal due to the rising demand for supplemental education, offering services that can often be run from smaller or home-based venues.
- Eco-friendly solutions: Franchises that promote sustainability, like Cartridge World, attract consumers interested in environmentally friendly solutions and offer a niche market with growing demand.
Choosing the right franchise involves considering factors such as investment levels, personal interests, and the desired level of involvement in day-to-day operations. Each type provides unique benefits and challenges, making it essential to select one that aligns with your business goals and lifestyle.
How to Start a Franchise
Embarking on the journey to start a franchise is both exhilarating and structured. Here’s a guide to launching your very own franchise in a few steps:
Scout the Franchise Landscape
Dive into the vast ocean of franchise opportunities. Use resources like Search4Franchises to sift through options based on your interests, budget, and the freedom to work from home. Pay attention to the specifics—fees, capital requirements, potential earnings, and additional expenses like marketing and royalties.
Market Feasibility Heck
Before you leap, take a good look at the terrain. Ensure the local market isn’t already flooded with similar franchises. Remember, uniqueness in your chosen location can be a game-changer.
Financial Forensics
Crunch the numbers thoroughly. Starting a franchise means more than just the initial investment; consider ongoing royalties, rent, equipment costs, and local taxes. Make sure you’ve got the budget to handle it all.
Craft Your Plan
Even with a predefined business model, your personal blueprint for success is crucial. Draft a business plan that showcases your strengths and demonstrates a deep understanding of the market. Highlight how you will draw in the local crowd and ensure their loyalty.
Licence to Operate
Delve into the franchise agreement. This document is your playbook—understand every rule, every play. It’s vital to grasp all obligations and standards before you sign on the dotted line
Legal Foundations
Establish your business as a formal entity like an LLC or a corporation. This step is crucial for financial organisations and for protecting personal assets.
Location, Location, Location
Pick a prime spot that adheres to the franchisor’s specifications and appeals to your target audience. Whether it’s a bustling street corner for a coffee shop or a serene neighbourhood for a service-oriented franchise, location matters immensely.
Assemble Your Team
Now that you’ve got the setup, it’s time to staff up. Hire people who not only fit the franchisor’s criteria but also share your vision and enthusiasm. If your franchise network offers it, consider recruiting from within the network for experienced talent.
Starting a franchise is like setting up a tent at a festival of opportunities—it should be thrilling, well-planned, and ultimately rewarding. Follow these steps not just to launch a franchise, but to thrive in it!
Conclusion
When you start a franchise, it can involve just as much effort as launching a brand-new business.
However, partnering with a franchisor like Search4Franchises allows you to concentrate on the critical parts of running the business while the broader strategic elements are already established. This collaboration means you’re not starting from zero; the foundational business model and brand recognition are in place, ready for you to build upon.
