By Tom Endean, British Franchise Association
The increasing popularity of franchising has seen the industry grow from £5 billion 20 years ago to £12.4 billion today. But what makes franchising such an enticing choice for those wanting to start their own business? The British Franchise Association’s Tom Endean explains:
We are in tough economic times. It remains true that many ambitious people wish to create and launch their own venture, but in this climate, more so than ever prospective businesspeople have reservations about ‘going it alone’.
Franchising is seen by many as the solution. Providing the security of a proven business system, a protected brand and ongoing support from the wider network, works for almost 37,000 franchisees across the UK2. The latest BFA research shows that 90 per cent of franchisees achieve business success, a rate far higher than non-franchising businesses. This is a compelling incentive for anyone thinking about starting a business or taking on a new business challenge. Let me explain some of the advantages in more detail and highlight some of the success stories we work with at the BFA.
Establishing a brand can be one of the biggest challenges in making a business successful, but with a franchise comes a system and brand that works. Therefore, one of the main advantages of franchising is that the business is backed by an already developed operation which has been ‘tried and tested’ in the marketplace.
Joining a pre-existing brand, the products and services are already established and the franchisee is therefore all set to launch their own ready-made business package. As franchisees are working under a previously established trading name, new franchise owners are able to focus their efforts on developing their own business and customer base.
Buying into a franchise also means buying into an established array of training and support packages created and run by the franchisor, allowing not only the ability to get ahead from day one, but access to developmental training packages to support the business as it grows.
Most franchisors have in place a range of training and support packages to help the new franchisee get started and drive the greatest returns. The prospect to learn from the franchisor that understands first hand how business owners will need to operate is a great way to gain knowledge and insight into not only the franchise but the business world itself. This support allows franchisees to start from a position of complete preparedness.
An example of a franchise owner who has benefitted from extensive support offered by her franchisor is Afia Sirkhot of McDonalds in Birmingham and Dudley. McDonald’s - as a very well established and ethical franchise - offers extensive support from initial ‘on the job’ training to industry leading advertising and marketing and developmental business management.
Afia, a successful businesswoman in her own right with a background in retail and business was recently awarded with the BFA HSBC Franchisee of the Year Silver Award in recognition of her success not only in delivering growth, but in her community and employment initiatives. McDonald’s support system played an important role in helping Afia to achieve success and in recognition of her business accomplishment, McDonald’s have recently offered Afia a third restaurant.
Maximising Business Potential
A successful franchisee is an enterprising business person who is able to work within an existing and proven business model, but who can also help to evolve that model or brand.
Although each business has pre-determined products and services, each outlet is owned and operated by the franchisee. A clear example of where a franchise owner has helped to build further on the franchise model by working with the franchisor is the BFA HSBC Franchisee of the Year UK Gold Award winners, Mike and Catharine Chalton of Home Instead Senior Care. Home Instead offers high-quality care for older people in the comfort of their own homes, but took this one stage further. Mike and Catharine have been credited with identifying the need for - and working closely with their franchisor to initiate - a system which has set new standards for healthcare not only nationally, but internationally.
Their practices are being trialled with an aim to improve the quality of care for elderly people. Home Instead also works alongside various institutions around Mike and Catharine’s Wirral-based franchise. This innovative approach demonstrates the involvement franchisees can have by working with their franchisors to develop not only the brand’s offerings but the standards across an industry.
The BFA HSBC London and the South East regional franchisee winners Amar Radia, Adarsh Radia and Asad Hamir run four successful O2 franchises across London and have recently opened the largest O2 store in the country on London’s Tottenham Court Road. The trio have made the most of their business’ potential, with O2 establishing specialist customer services in the Tottenham Court Road store through an affiliation with the RNIB and RNID. The judges at the recent BFA awards commended the businessmen for their focus on customer service and praised their efforts as an inspiration to small business start-ups.
One of the main considerations for any prospective franchisee is funding. When considering funding, it is important to remember that banks traditionally look favourably on franchising because of its success rate and the lower risks associated with joining an established franchise. A number of franchisors work closely with banks, like HSBC, that have specialist franchising expertise and understand the intricacies.
The BFA accredits franchisors using a stringent set of criteria based on a code of business practice and the European Code of Ethics for Franchising. All members are listed on the BFA’s website to allow potential franchisees to check which brands have passed these checks.
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