Why Consider Investing in a Proven Franchise Model?
Breaking away from the 9-5 daily grind of employment and venturing out into the world of business ownership can be one of the most rewarding decisions a person could make. The trouble is that these rewards don’t come without a cost. Starting out on your own comes with massive financial risk, heaps of stress, risk of failure and limited guidance and support.
Joining an established franchise can relieve you of most of these risks whilst still providing you with all the advantages of running your own business.
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Where Franchising First Started
While there were earlier forms of licensing and distribution agreements, franchising, as a business concept, started to take shape in the US around the late 1800s.
The Singer Sewing Machine Company was one of the earliest examples of franchising. The company began offering licenses to independent dealers which allowed them to sell and service Singer sewing machines in different areas across the country and this strategy allowed Singer to rapidly expand its market reach.
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It was not until the 1950s that franchising started to become a well-established business model and began to gain widespread popularity. During this time notorious franchised businesses such as McDonald's and KFC began to expand rapidly across the US and the world, setting the stage for the global franchising industry we see today.
The standardised systems, branding and operational procedures that were all developed during this time are now common in the franchising world. Franchising experienced significant growth and development in the 1950s and 1960s for several key reasons:
Post-War Economic Boom: In the 1950s the US benefited from a period of economic prosperity. This post-World War II economic boom crafted the perfect conditions for business expansion, which included franchising. As a result of people having more disposable income and the desire for convenient dining and retail options, the growth of franchise businesses exploded across the nation.
Standardisation: Franchisors like McDonald's and KFC developed detailed operating manuals and procedures to ensure the consistency of customer experience and product quality across all franchise locations. This method ensured standardisation which made it easier for new franchisees to replicate the success of the original business.
Entrepreneurship and Opportunity: The franchising model presented an opportunity for aspiring entrepreneurs. They would be able to own and operate their own businesses with the support and guidance of an already established brand. Franchising allowed entrepreneurs to venture out into the world of business ownership whilst still enjoying the security of a proven business concept.
Advertising: During the 1950s the television became a dominant form of entertainment for households across the US. With this, TV advertising become an incredibly important avenue for brands to showcase their products and services. Franchisors made the most of TV advertising to promote their brands nationally, thus reaching a much broader audience. Iconic ad campaigns, like McDonald's "You Deserve a Break Today", helped attract customers across the nation.
Legal Framework: Franchise agreements and regulations were developed to protect both franchisors and franchisees alike. With the growth of franchising as a business model, the Federal Trade Commission (FTC) eventually developed rules and regulations that governed franchising. This provided legal stability to the industry, which in turn attracted even more entrepreneurs looking to explore the franchising model.
Successful Role Models: The success stories of early franchisors like Ray Kroc (McDonald's) and Colonel Harland Sanders (KFC) became influential examples of what was achievable through franchising. Their success encouraged other entrepreneurs to explore franchising as a business model.
Rise of Franchising: Why franchising is growing in the UK.
They say that there are no certainties in life – this is particularly true when it comes to business. You might have a killer idea and the best quality product or service, but this alone doesn’t guarantee success. While it’s true that there’s no such thing as a bulletproof business, franchising seems to survive both economic and political instability.
Why is franchising growing?
Going Global
In the ‘olden days’ if a business wanted to expand internationally, they would have to embark on an endurance test of regulations, language barriers and travel expenses in order to set up a branch of their business overseas. Not so with franchising.
Unlike the traditional business model, a franchisee will be a resident of the new country – which means that language barriers won’t be a problem and the franchisee will have a knowledge of the country and culture that the business owner is unlikely to share.
For many brands, the key to success is in international expansion and, franchising is, by far, the simplest and most cost-effective way of doing this.
Recession-Proof
The pandemic saw many businesses close their doors for good. As we mentioned earlier, the franchise industry withstood the climate and continued to grow.
Although it’s not always the case, often franchise businesses sell low cost, everyday products such as fast food and coffee. Even when a country is going through a recession (or a pandemic), these businesses tend to survive. While people may tighten their belts by giving up luxury products and services as they ride out the storm, most, are unlikely to sacrifice their daily cappuccino or weekly pizza.
A huge number of franchise businesses trade in repeat purchases which are part of their customers’ lifestyle. For the same reasons, franchise businesses tend to survive compared to many independent ones.
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Built for Success
Every year, many people opt out of the rat race to follow their dreams and set up their own business – only to see it fail within a year.
Starting a business from scratch takes time and money and carries a huge amount of risk. While franchising in most cases involves a financial investment on the part of the franchisee, this is usually a fraction of what they’d spend on going it alone and, the risk factor is considerably lower with this model.
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Banking on Support
Banks and other lenders have become increasingly reluctant to fund brand new businesses with nothing behind them but a dream and somebody confident enough to pursue it.
On the other side of the coin, somebody seeking finance to buy a franchise business has a much higher chance of becoming the banker’s friend. This is simply because funding for a business with a national or global brand behind it is a much safer bet than an independent one. Because of this, loans for franchise businesses have increased exponentially while those for new businesses dwindle even further.
​Conclusion
Franchising is a more accessible way of starting a business – with a business model already in place, a credible brand, potential to expand and plenty of funding initiatives to help you get started, it makes sense then that more and more people are choosing the franchise route.
It is clear that franchising is a robust business model with many benefits for the franchisor, franchisee and customers.
Franchising 101 –
The Basics
Franchising is a business model in which the franchisor grants the franchisee the right to operate a business using the franchisor's brand name, trademarks, business systems and support. This is done in exchange for certain fees and ongoing royalties which are paid to the franchisor by each of their franchisees.
It’s an increasingly popular way for entrepreneurs to own their own businesses while benefiting from the security of the already established business model of a well-known brand.
Below you’ll find some key elements to franchising:
Franchisor: The franchisor is the body that owns the original business concept, the brand and all the relevant trademarks. They develop the business model, provide training and support to franchisees as well as set the standards for operating the franchise.
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Franchisee: The franchisee is the person or entity that buys the rights to operate a business using the franchisor's brand and systems. Franchisees are responsible for managing the day-to-day operations of their franchise location in accordance with the standards set out by the franchisor.
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Franchise Agreement: Is a legal contract between both the franchisor and franchisee that outlines the terms and conditions of the franchise relationship. It forms the base on which the relationship between the franchisor and franchisee is built and includes details about fees, royalties, territory, training and other important aspects of the business.
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Fees and Royalties: Franchisees typically pay an initial franchise fee to acquire the rights to the franchise. They then also pay ongoing royalties, also known as management service fees, which is usually set at a percentage of their revenue. These fees help cover the franchisors cost of providing the necessary training, support and marketing assistance.
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Training and Support: Franchisors provide training to franchisees to ensure they understand the business model and can operate the franchise successfully. Ongoing support may include marketing assistance, supply chain management and updates to the business system.
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Brand Recognition: One of the main advantages of franchising is that franchisees benefit from the established brand recognition and customer base of the franchisor. This can make it easier to attract customers and generate revenue.
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Consistency: To ensure consistency in product or service quality and customer experience across all franchise locations, franchisors maintain a high level of control over how their brand is represented and how their businesses operate.
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Territorial Rights: To achieve fairness, franchisees often receive exclusive or protected territories, which means that no other franchise location of the same brand can operate within a certain geographic area.
​Conclusion
Franchising can be found in various industries, including fast food, retail, hospitality, real estate, home care and more. It offers a way for aspiring entrepreneurs to start their own businesses with the added security of having the support and guidance of an established brand. This often increases the chances of success compared to starting a business from scratch. However, it's essential for both franchisors and franchisees to carefully review and understand the terms of the franchise agreement before entering into a business arrangement.
When done correctly, franchising creates a win-win relationship between the franchisor and their franchisees. The franchisor benefits from rapid expansion and an increase in capital, whilst each franchisee benefits from building a profitable business with the support and guidance provided by the franchisor.
Why Consider Investing in a Proven Franchise Model?
Breaking away from the 9-5 daily grind of employment and venturing out into the world of business ownership can be one of the most rewarding decisions a person could make. The trouble is that these rewards don’t come without a cost. Starting out on your own comes with massive financial risk, heaps of stress, risk of failure and limited guidance and support.
Joining an established franchise can relieve you of most of these risks whilst still providing you with all the advantages of running your own business.
Benefits of a proven franchise model:
Investing in a proven franchise model offers a whole host of advantages that can make it an attractive option for entrepreneurs and investors alike. Below we have listed some compelling reasons to consider investing in a proven franchise:
Established Brand: Proven franchises are often accompanied with recognisable and trusted brand names. This brand recognition can considerably reduce the time and effort required to attract customers, as consumers are already familiar with the brand and its products or services. This ultimately allows you to focus less on marketing and more on the business itself.
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Economies of Scale: Established franchises often benefit from economies of scale in purchasing, marketing, and other areas. Franchisees can take advantage of these benefits to access better pricing on supplies and services, which improves their profitability.
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Proven Business Model: Having developed and refined their business models over time, successful franchisors, have identified what works and what doesn't. This leads to a proven and replicable system that franchisees can follow. Following an already proven model reduces the risk of failure compared to starting a new business from scratch.
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Training and Support: Franchisors typically provide a comprehensive initial training programme and ongoing support to franchisees. This includes everything from getting started with finding clients and how to run the business to ongoing assistance with marketing, operations, and more. This guidance can be invaluable, especially for individuals who may not have prior experience in the industry.
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Marketing and Advertising: Franchisors often invest heavily in national marketing campaigns to promote the brand, leaving franchisees to focus solely on local marketing campaigns. Both the franchisor and franchisees benefit from these collective efforts, generating greater visibility.
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Exclusive Territories: Almost all franchise agreements provide franchisees with exclusive or protected territories. The benefit of doing this means that you won't have to compete with other franchisees from the same brand within your assigned area, reducing competition and allowing you to focus on serving your local market.
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Proven Track Record: Established franchises have a track record of success, which can be assessed through the performance of existing franchise locations. This history of success can provide confidence to potential investors and lenders.
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Access to Financing: Lenders are often more willing to provide financing to franchisees because of the support provided by the franchisor and the proven success of the business model. This can make it easier to secure the necessary funding to start or expand your franchise.
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Community and Networking: One of the most beneficial advantages for franchisees is that they often become part of a larger community of like-minded business owners. Being part of a network can provide new franchisees with valuable insights and advice, making the business journey less isolating.
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Exit Strategy: Established franchises often have attractive exit options for franchisees. If you decide to sell your franchise in the future, there may be a more extensive pool of potential buyers due to the brand's recognition and reputation.
​Conclusion
While investing in a proven franchise model offers many advantages, it's essential to ensure that you conduct thorough due diligence. It is important that you carefully review the franchise agreement and seek legal and financial advice before making any commitments.
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Not all franchises are equal, so it's crucial to choose one that aligns with your goals, skills and financial resources.
Discover Your Freedom with Home-based Franchising
Imagine running a successful business right from the comfort of your own home—no commute, no office politics, just the ultimate blend of flexibility and convenience.
Bookkeeping and Accounting: Crunch numbers and help small businesses thrive! If you have a knack for finance, a bookkeeping or accounting franchise lets you offer essential services like payroll, tax prep, and financial analysis, all from the comfort of your home.
Home Inspection: Be the expert eyes that potential buyers and sellers rely on. Home inspection franchises allow you to evaluate properties and ensure they’re up to standard. When you’re not on-site, you’re running your business smoothly from home.
Real Estate: Take control of the real estate market from your home base! With certain real estate franchises, you can manage the administrative side of the business remotely, leaving you more time to close deals and make things happen.
IT Services and Support: Keep businesses up and running with top-tier tech support! IT franchises offer everything from network management to cybersecurity. You’ll be the go-to expert, solving problems and ensuring smooth operations—all without leaving your home.
Content Creation and Copywriting: Turn your passion for words into profit! Whether you’re crafting compelling web content or creating marketing materials, content creation and copywriting franchises offer a creative outlet that can be managed from anywhere.
Whether you’re passionate about education, tech, travel, or wellness, there’s a home-based franchise waiting to turn your dreams into reality. Here are some exciting options to explore:
Consulting and Coaching Franchises: Share your expertise and empower others! Dive into the dynamic world of business, career, or life coaching. From guiding entrepreneurs to helping individuals reach their personal best, consulting and coaching franchises let you make a real impact—all while working from your home office.
Online Education and Tutoring: Make a difference in the world of learning! Home-based franchises in education allow you to provide top-notch tutoring, test prep, or language lessons. Imagine shaping futures and unlocking potential, all without leaving your house.
Digital Marketing and SEO: Ride the wave of the digital revolution! With the internet as your playground, you can run a thriving digital marketing or SEO franchise. Help businesses grow their online presence, boost their visibility, and watch your own success soar—all from your laptop.
Travel Agency: Turn your love of travel into a thriving business! As a home-based travel agent, you’ll craft unforgettable experiences for clients, planning dream vacations and seamless business trips—all while working from your cosy home office.
​Conclusion
Before you dive into the world of home-based franchising, make sure to do your homework. Investigate each opportunity, assess the costs and potential returns, and consider your skills and passions.
Don’t forget to consult with legal and financial experts to ensure the franchise is the perfect fit for your goals.
Unlock the Potential of Proven Franchise Success
The world of franchising offers countless opportunities, with proven models across various industries that have stood the test of time. The key to a franchise's success lies in market demand, a powerful brand, a robust business model, and the support you receive from the franchisor.
Here are some of the most successful and well-established franchise models that have paved the way for entrepreneurs like you:
Fast Food and Quick-Service Restaurants: Dive into a global phenomenon with iconic brands like McDonald's, Subway, Dunkin', and Domino's Pizza. These giants of the fast-food industry have built empires on consistent quality, widespread appeal, and unparalleled brand recognition.
Retail Franchises: Retail is a world of endless possibilities. From the convenience of 7-Eleven to the tech-savvy appeal of Best Buy and the DIY spirit of The Home Depot, retail franchises offer a wide range of products and services that cater to diverse consumer needs.
Fitness and Gym Franchises: Ride the wave of the health and wellness boom with top fitness franchises like Anytime Fitness, Planet Fitness, and Orangetheory Fitness. These brands have tapped into the growing demand for healthy living, making them leaders in the fitness industry.
Automotive Services: Keep the wheels turning with automotive franchises like Jiffy Lube, Midas, and Meineke. These brands are trusted names in car maintenance, offering everything from oil changes to tire rotations and beyond.
Childcare and Education: Invest in the future with education-focused franchises like The Goddard School, Mathnasium, and Kumon. These brands are dedicated to providing top-notch educational services that help children thrive academically.
Senior Care: The aging population has created a booming market for senior care franchises like Home Instead Senior Care and Comfort Keepers. These brands are at the forefront of providing compassionate care and support for seniors.
Cleaning and Maintenance Services: Make a clean sweep with franchises like Merry Maids, Chem-Dry, and Jan-Pro. Whether it’s residential maid services, carpet cleaning, or commercial cleaning, these brands are known for their reliable and efficient services.
Health and Wellness: Tap into the lucrative wellness industry with franchises like Massage Envy and The Joint Chiropractic. These brands offer services that cater to the growing demand for health and wellness, helping clients feel their best.
Real Estate: Become a key player in the real estate market with franchises like Keller Williams Realty and RE/MAX. These brands offer comprehensive services for buying, selling, and renting properties, backed by extensive industry experience.
Housing and Property Management: Manage properties like a pro with franchises such as Property Management Inc. (PMI). These brands provide top-tier property management services for both residential and commercial properties.
Pet Care: Turn your love for animals into a thriving business with pet-related franchises like PetSmart, Pet Supplies Plus, and Dogtopia. These brands cater to every pet owner’s needs, from supplies to grooming and daycare.
Home Improvement and Remodelling: Transform homes with franchises like The Grounds Guys and Kitchen Tune-Up. Whether it’s landscaping or kitchen remodelling, these brands are leaders in the home improvement industry, making dream homes a reality.
Education and Tutoring: Shape minds and futures with tutoring franchises like Sylvan Learning and Huntington Learning Center. These brands are dedicated to providing exceptional educational services for learners of all ages.
Printing and Marketing Services: Help businesses shine with printing and marketing franchises like Minuteman Press and FASTSIGNS. These brands offer a range of print, signage, and marketing solutions to meet the needs of any business.
Automotive Repair and Maintenance: Keep vehicles running smoothly with repair and maintenance franchises like AAMCO Transmissions and Precision Tune Auto Care. These brands offer a full spectrum of automotive services, ensuring cars are road-ready.
​Conclusion
Before you take the leap into the exciting world of franchising, it’s essential to do your homework. Carefully evaluate the initial investment, ongoing fees, franchisor support, market competitiveness, and how well the opportunity aligns with your skills and passions.
And don’t forget—consult with legal and financial experts to ensure the franchise agreement is a perfect fit for your goals.
Franchising in the UK – What you need to know
The franchising landscape in the United Kingdom is thriving, offering a wealth of opportunities across various industries. Whether you’re eyeing the bustling food and beverage sector, retail, or specialised services, the UK’s well-established franchising industry has something for everyone.
If you’re considering diving into the world of franchising in the UK, here are some key points to guide your journey:
Regulations and Associations: The UK’s franchising industry is guided by the British Franchise Association (BFA), the gold standard for ethical practices. Partnering with a BFA-affiliated franchisor ensures you’re working with a brand committed to upholding the highest standards in the industry.
Franchise Disclosure: Transparency is key! Franchisors in the UK are required to provide a Franchise Disclosure Document (FDD), a comprehensive guide that details everything you need to know—financials, obligations, and the terms of the franchise agreement. It’s crucial to review this document thoroughly, and seeking legal advice can help you navigate the finer details.
Market Research: Knowledge is power! Conduct in-depth market research to find a franchise that aligns with your passions, skills, and local market demand. Consider the competition, your target demographic, and the ideal location to give your franchise the best chance of success.
Financial Considerations: Understand the numbers. From initial investments and franchise fees to ongoing royalties and working capital, get a clear picture of the financial landscape. Make sure you have the resources to not only launch but also sustain your franchise long-term.
Franchise Support: Success doesn’t happen in isolation. Evaluate the support offered by the franchisor—training, marketing assistance, ongoing guidance, and access to a proven business model. Strong franchisor support can be a game-changer for your business.
Location Selection: For retail or location-based franchises, the right spot can make all the difference. Choose a location that matches your target market and meets the franchise’s requirements. The success of your franchise could hinge on this critical decision.
Legal and Financial Advice: Don’t go it alone. Engage legal and financial professionals who specialise in franchising to help you decode the legal jargon and assess the financial viability of the opportunity. Their expertise can save you time and money, as well as potential pitfalls.
Franchise Financing: Explore your financing options. Whether through personal savings, bank loans, or government grants and incentives, securing the right financing is essential for getting your franchise off the ground.
Training and Education: Knowledge is your foundation. Take full advantage of the training provided by the franchisor. Initial and ongoing training programs will equip you with the skills and knowledge needed to operate your franchise successfully.
Network and Franchisee References: Learn from those who’ve walked the path before you. Connecting with existing franchisees can offer invaluable insights into the day-to-day realities of the business, franchisor support, and potential challenges.
Business Plan: Plan your path to success. Craft a detailed business plan outlining your goals, strategies, and financial projections. A strong business plan not only helps in securing financing but also serves as your roadmap for running the franchise.
Compliance and Contracts: Know what you’re signing up for. Ensure you fully understand and are prepared to comply with the terms and obligations set out in the franchise agreement. Remember, these agreements are legally binding, so it’s crucial to meet your contractual obligations.
​Conclusion
The UK is a fertile ground for franchise success, with opportunities ranging from food and beverage to retail and specialised services.
By conducting thorough due diligence, seeking professional advice, and choosing the right franchise, you can set yourself on a path to thriving in the UK’s dynamic franchising sector.