How to buy a franchise –
get insight and tips from these guides
Thinking of buying a franchise? Then you’re in the right place. DaltonsBusiness has compiled a series of franchise guides, with contributions from franchising experts and industry veterans. It really doesn’t matter which stage you are at in your research, you’ll find plenty of pearls of wisdom and useful franchise facts in any one of the posts published here.
What is a franchise?
The type of franchise that most of us recognise is known as a ‘business format franchise.’ In this system, the franchisor grants a franchisee the rights to operate under its brand. This licence is governed by the Franchise Agreement and, when conducted properly, it offers significant benefits to both franchisor and franchisee.
The franchisor is able to expand their business through inward investment from franchisees, who then replicate the franchisor’s business and tap into new markets or territories. The franchisee faces less risk – and makes money faster – because they are supported within a proven system, while the franchisor gets a cut of the revenues for sharing that system.
Why buy a franchise?
You’re probably aware that buying a franchise gives you a blend of self-employment and support. You are your own boss and free to determine your success. But you have security in being part of something much bigger. What’s more, you’ll have an established blueprint to follow as well as training and guidance from those who’ve been there before you.
Tens of thousands of people have started franchises here in the UK, and tens of thousands of them retain profitable businesses to this day. And that’s one of the key advantages of buying a franchise: statistically, you’re far more likely to make it work – and see a return on your investment – than if you set up a stand-alone, independent business.
Who makes a good franchisee?
So is starting a franchise business the right route to market for everyone? No, it isn’t. If you are very independently minded, you might feel restricted by processes that must be adhered to. And some people simply prefer being free to do what they want. If you’re a maverick or possess a pioneering spirit, then you might be better off going it alone.
But, for those of us who are keen to run a business of our own, and would appreciate some help along the way, buying a franchise could be the perfect career choice. The best franchisees are those ready to learn and listen to advice from their franchisor. It might be a cliché but, in franchising, the last thing you should do is try to reinvent the wheel!
How much does it cost to buy a franchise?
Franchises come in all shapes and sizes. At the lower end of the scale, you can buy a franchise for a few thousand pounds. While, if you go large and take on a multi-site franchise, you might end of investing hundreds-of-thousands-of-pounds. According to the British Franchise Association, though, the average cost to buy a franchise is around £40,000.
Don’t worry if you can’t raise all of the finance yourself, though, as another advantage of buying a franchise is the ability to source bank funding – in many cases up to 70% of the total investment required. The banks know that a good franchise system is a safe bet for them, and that they are more likely to see their loan repaid in full!
How to choose the right franchise
How do you go about buying the right franchise for you, then? Well, like any big decision you make in life, you need to ask yourself a few questions first. The first one being: what do you want to achieve? Is it more money, more autonomy or a better life. Or is it all three? After that, you must be honest with yourself about your own skills, ambitions and lifestyle.
What are you good at? Do you like being around people, or are you happier alone Do you want to build an empire or merely have more control? There are hundreds of franchise opportunities available in the UK today – from van-based franchises to multi-site mega-brand franchise restaurants – so it’s fair to say there is something for everybody out there.