Franchising is a huge deal here in the UK, so what’s all the fuss about? And is it the right path for you?
If you’re relatively new to the concept of franchising, you might be very surprised at just how prevalent it is in the UK. Both big name brands and SMEs have been using franchising for decades as a way to expand their businesses and individuals have been flocking to it as a way to start their own business and escape corporate life.
At the last count in 2018, the British Franchise Association survey put the number of franchises operating in the UK at just under 1000, with more than 750,000 people working in industries worth more than £17.2billion. Despite the turbulence of the last few years, that figure is actually expected to rise in 2022 and beyond as franchising has consistently maintained stable growth throughout all the major economic downturns of the last 40 years.
There are lots of reasons why companies might choose to expand through franchising, not least recruiting talented individuals to rapidly expand their brand, but this is a business model where both parties have a great deal to gain. So, why is it so effective and what are the benefits to you as a franchisee?
Greatly reduced risk
While nothing in life is risk-free, joining a franchise is a far safer and more reliable way of starting your own business than setting up from scratch. It is a sad fact that most new business fail within their first 3 years. Industry statistics show this failure rate to be at least 60% and this is likely to be a lot higher during times of economic uncertainty.
In comparison, according to Entrepreneur Europe, the failure rate among new franchises is just 10%. The British Franchising Association also reported that 93% of franchisees were showing profit in 2018, with just 1% of franchises closing their doors due to commercial failure. The figures for 2020 and 2021 show a slight slowdown but far below that of the wider economy, with sectors like home improvement showing a significant bounce back to levels higher than before the pandemic.
Joining a franchise means that you can buy into a business that has already established itself on the market and overcome many of the challenges and dangers that new companies face. They are more robust and resilient by their very nature and much better placed to face up to unexpected events.
You will also likely find that the initial investment required for joining a franchise is a lot less than you would need if you were going it alone. You’ll also need to spend a great deal less over the medium and long-term on building the brand and its image with customers. While you are still going to have to be just as hard-working and dedicated as on any other project to really see it pay off, your outlay will be lower and you are more likely to see a significant return on your investment within the first few years.
An established brand and customer base
Establishing your new brand on the market can take years of effort and expense but with a franchise, customers will already know about the brand you are joining. Though you will still be expected to promote your business in its new territory, you will benefit from the many years of advertising and brand awareness already carried out by your franchise partner. You’ll also be part of their national marketing campaigns and enjoy access to large scale coverage, such as TV adverts, that would be prohibitively expensive to pay for on your own.
Product innovation and R&D
Well developed brands have the manpower and capital to be constantly researching their market and developing new products and services to adapt to changing consumer trends. They are more likely to invest in entirely new concepts where they are necessary to keep their business one step ahead of the competition. You may have some great ideas yourself, but with a smaller team you are going to need to focus on your core business. With a franchise, this is handled by specialist teams with the capital needed to get results already firmly behind them.
For yourself, but not by yourself
It is many people’s ambition to become self-employed and run their own business and franchising lets you do exactly that. You can enjoy all the benefits of being your own boss, but also be part of a larger network of like-minded individuals and industry experts with whom you can solve problems, and share ideas and best practice. Having that framework of support gives you a huge advantage. It can help you to quickly maximise the earning potential of your new franchise, as well as avoid the sense of isolation that can sometimes come with new business ownership. You’ll be able to tap into a shared resource of experience and expertise for advice and guidance whenever you need it.
What franchising is not
Franchising is not a get rich quick scheme, nor is it a 100% guarantee of success. You’re still going to have to work hard for it and how successful you are still comes down to you. It’s no easy option and it’s not for everyone, but it is a business format that has been proven time and time again to be the most stable and reliable way for the right people to achieve a great deal of success.
Put simply, it is a tried and tested formula for giving you a springboard to profitable business ownership far in advance of what you could achieve on your own.
If you want to learn more about how franchising works, and if it could work for you, check out our Simple Guide to Investing in a Franchise.
Another great resource is the British Franchise Association.
Alternatively, if you are interested in how franchising could help you start your own home renovation business, why not reach out to us here at Granite & TREND Transformations for a friendly chat?