Could You Franchise? Should You Franchise?
Vicki Mitman and Ed Savory of Leathes Prior’s Franchising team provide their thoughts on franchising your business
When you think “franchise” you probably think of a fast food restaurant like McDonalds or a coffee shop like Costa. There is in fact a huge variety of businesses which have successfully franchised which together contribute a staggering £13.4 billion to the UK economy (source: Natwest bfa Franchise Survey 2012).
These businesses range from having franchisees running high street outlets in the fast food, retail, fashion and beauty sectors, to office-based, “man-and-van” and part-time or home-based franchises. The range of sectors in which franchises operate is vast including healthcare, retail, domestic and commercial cleaning, educational & sports coaching, theatrical performance & arts, fashion & beauty, computer services, signage, business cost reduction, accountancy and bookkeeping, automobile services, lawn care, landscaping and gardening, home improvement, exercise & weight loss, estate & letting agency, pet care and pest prevention.
The type of business you own may have already been franchised but you should not be put off by that as it may be the ideal way for you to expand. If you own a business, there is a good chance that it could be franchised.
But the question is whether you should franchise. In order to successfully franchise your business you should ask yourself the following questions:
1. Is your business financially viable and would it still be viable for your franchisees if they had additional costs of 5-15% (which would typically be payable by the franchisees to you, as the franchisor)?
2. Is there long-term demand for your products and/or services as most franchises are granted for at least a 5 year term?
3. Are your business processes easily replicable? To ensure that all franchisees operate in exactly the same way, your systems and processes need to be easily communicated and repeated by your franchisees.
4. Can you easily train a person who is unfamiliar with the industry or concept to run the business?
If the answer to each of these is “yes” then you are on the right track. The first step may be to review your business in order to prepare it to franchise. From there you will need to create a franchise business model which is clearly defined in a manual (a “How To Guide”) and put in place an effective legal structure through which to operate it. Of course, not all businesses are suited to franchising and there are a range of expansion options which will be available to your business including organic growth, acquisition, agency and/or distribution.
Our team has extensive experience in advising businesses on expansion through franchising and other means. If you would like to discuss the potential expansion of your business with a member of our Franchising team, please call us on 01603 610911 and we will be happy to help.
Leathes Prior’s Franchising team provides a full range of services to franchisors both nationally and internationally across a broad range of business sectors, from brand protection to drafting franchise agreements, together with advice on property, employment, data protection, commercial arrangements, corporate matters, international expansion and dispute resolution. The firm is an Affiliate member of the British Franchise Association.