What is franchising?

The British Franchise Association

The British Franchise Association (bfa), established in 1977, is the only voluntary self-accrediting body for the UK franchise sector. Its aim is to promote ethical franchising practice and help the industry develop credibility, influence and favourable circumstances for growth. It does this with a self-regulatory, standards-based approach to membership of the association.

Membership of the bfa is divided into three levels of franchisor membership and affiliate membership for professional advisers. The franchisor members have to meet the standards set by the bfa in order to establish that their franchise represents a fair, ethical and disclosed opportunity.

What is business format franchising?

This is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.

The provision of ongoing support is also a vital element. While the franchisee is the owner of the business, it is important to bear in mind that it is the franchisor’s system and brand that the franchisee is operating under. An ongoing dialogue between franchisor and franchisee is crucial, therefore, in contributing to the success of each individual franchise unit and, consequently, the franchise network as a whole.

Why franchising?

The motivations for investing in a franchise are many and varied, and it is seen as a realistic option for many people who want to start their own business. The clear advantages to franchising include:

• you do not have to come up with an idea; someone else has had it – and tested it too!
• larger, well-established franchise operations will often have national advertising campaigns and a solid trading name
• good franchisors will offer comprehensive training programmes in all business skills, including sales
• good franchisors can also help secure funding for your investment as well as, for example, discounted bulk-buy supplies for outlets when you are in operation
• you will be in business for yourself but not by yourself – although you ‘run your own show’ you are part of a much larger organisation and will have the backing of a franchisor support team.

Next steps

As with any life-changing decision or significant investment, there will of course be important factors to consider, and anyone thinking of starting a franchise should carry out thorough due diligence in advance, bearing in mind the following points.

bfa membership

Of the 759 franchisors operating in the UK, 338 are members of the bfa, and 61% of new franchisees make bfa membership part of their criteria for assessing a franchise.

Your finances

Understand right at the beginning what you can afford to invest and what borrowings you are prepared to take. Also pay attention to the returns that the business will generate for you. Do this before you fall in love with something that you cannot afford, or that cannot support you or your family.

You

What are you good at doing? What do you want to do and what will your family life and personal circumstances prevent you from doing? If you cannot bear the public then consumer-facing businesses may not suit. Equally, if you take the kids out every weekend a business that requires weekend work is not ideal.

Research the market

Speak to trade associations for the operational business. Use the internet to research the business that you will be involved in. You need to understand what that business actually does and the market in which it operates.

Visit an exhibition

Go along to one of the five franchise exhibitions supported by the bfa; this is an ideal way of seeing the breadth of opportunity available to prospective franchisees. You will also be able to meet, and discuss your suitability with, a number of franchisors.

Research the franchise

Speak to current franchisees of your choice – don’t just settle for the ones you are offered. Look for franchisees with a background like yours or those at differing stages of development in different areas. Also, research the franchisor. What is his/her background? How has the business grown? Have they lost any franchisees?

There is no shortage of choice when it comes to finding an industry that suits your needs and aspirations. The biggest problem faced by those coming to franchising for the first time is knowing where to start their search and how to go about navigating their way through the maze of information out there.