So you’ve decided that your future lies in working for yourself – congratulations! You’ve also made the very sensible decision that franchising is the way to go, for a number of very sound reasons. It’s generally accepted that franchising lowers the risk of your business failing in the first few years as you are rolling out a tried and tested business model rather than trying to do something completely new. Also, joining an established business as a franchisee gives additional benefits such as economies of scale in buying, ongoing support from a dedicated person at head office, and benefits from advertising and promotional activities which a small business would be unable to fund. Not all franchises offer the same opportunities though, and there are several things to consider when you’re looking at all of the businesses and trying to decide which is the one for you.
Narrow Down the Industry
Most of us have preferences about which sort of industry we’d be more comfortable working in, or have experience in a specific market sector. This is usually where the narrowing down of franchise opportunities begins. If you have experience and interest in catering or food, you might be drawn to franchise businesses such as McDonalds, Papa John’s pizza or Subway. Similarly, if your background is in hospitality and hotels, a Best Western franchise might be for you. Or if you have experience managing people and working with lots of different types of clients, a Homeclean franchise could be perfect. Once you have a basic idea of the sort of opportunity you’re looking for, you can start crossing companies off the list which don’t fit the bill.
How Involved Do I Want to Be?
Some people enter into a franchise as a pure investment opportunity. They put up the money for the initial investment, hire a manager and leave the day to day running of the business to someone else. This can be an attractive proposition if you’re just looking at the bottom line and aren’t interested in finding something to occupy your time. It will of course mean that you have less profitability, as you will have the additional cost for management salaries. On the other hand, you may want to be fully hands-on with the running of your business and invest as an owner-operator.
What’s the competition like?
Some franchises are already very well established in the UK. There aren’t many towns which don’t have a McDonald’s or many airports which don’t have a Europcar or Avis. Taking on a franchise usually comes with a contract giving you a territory to operate in, and guarantees that nobody else can set up another branch of the same company within a certain distance. Large and busy city centres might be able to support several branches of a fast food franchise, but if you’re looking at starting a business in a small town, you may not be able to operate close to home. Look also at changes in the market; are there lots of short term rentals which need turning around between guests? Is there a high proportion of people renting property who want a “deep clean” at the end of their tenancy? Or perhaps there is a high concentration of busy professionals who want to book a cleaner through your Homeclean franchise to take on the housework they don’t have time for.
This is the big question – just how much are you going to earn when you’re up and running? The franchisor will be able to give you information on how much it will cost to buy the franchise initially, and what fees you will be charged on a yearly or quarterly basis. They will also give projected figures based on what average franchisors can expect to earn in sales. It’s important that you don’t take these figures as gospel and do your own homework, based on what you know about your local area, and what competition there is. Remember – you’re the one who stands to gain most from running a successful franchise, so it’s vital to spend time number crunching and running through various opportunities to see which seems most profitable.
Would a Master Franchise be a Possibility?
If you’re lucky enough to identify an opportunity to bring something new, such as the Homeclean concept, to your home market, this could give the additional possibility of a master franchise. This is a slightly different opportunity, in that a Master Franchiser buys the right to operations in a specified country or region. In practice this means that the Master Franchiser has a greater degree of control over the way the business develops. They may choose to operate one or more franchises themselves, or might choose to focus on recruiting other people to operate the franchises instead. Profitability is potentially higher, but time investment may be higher too.