What Important Things Should You Know Before Buying and Running a Franchise Business in UK

Think of opting for a franchise as playing it safe since you would have an already established business plan to follow, fixed startup costs and perhaps most importantly, stability. Franchising in the UK is big business, with over half a million people in the country employed in a franchise. But before you jump right in, there are a number of factors you need to think about.

Franchising is a long-term commitment

If you’ve ever heard that entering into business with a partner is like a marriage, expect that statement to be ten times as true in the case of a franchise agreement. Such agreements are long-term, usually a minimum of 5 years. Like a marriage, there’ll be highs and lows along the way, so you’ll need to be extra careful who you decide to enter such an agreement with.

It’s smart to only go with a franchise that’s registered with the British Franchise Association in order to be certain of their credibility. Given that a franchise is a major commitment, we recommend that you treat it as one and get an experienced solicitor to review the agreement. If you decide to sign, it’s crucial that you make sure you have your sights set on an adequate business insurance package right from the start.

Franchising requires ‘big’ money

Buying and running a franchise is not cheap. First, you have to pay the initial franchise fee and then you have to deal with the working capital needed to keep the business running, including wages, lease payments and equipment. Even if you’re capable of paying it all yourself, you might need to get outside funding, in which case you’ll have to be able to present a properly constructed business plan.

The franchisor is likely to provide a template business plan and may even help you in completing the plan, but it’s always a good idea to talk to other franchisees to determine what issues they might be dealing with and how they’ve managed them. This can help paint a better picture of the costs required not just to set up, but also to keep the business running. In addition, most franchisors will require you to pay ongoing fees annually or monthly, either as a percentage of turnover or a fixed fee. If you don’t get your math right from day one, your profit margins may only be negligible.

Franchisors don’t work with just anyone

Having the funds and willingness to run a franchise doesn’t mean you’ll get the deal. Most franchises tend to be highly selective about who they allow to buy their franchise. They have a brand to protect and need to be as certain as possible that you can deliver. In fact, some are of the opinion that you shouldn’t bother with a franchisor whose selection process is too lax. While business experience helps, your CV is not the only factor that matters. They’ll be more interested in you as a person and whether you’re the right fit for their brand.