Are you fed up of the daily grind of Monday to Friday, nine to five? Or perhaps its eight to six, or seven days a week on shift patterns. Either way, you are probably working hard for a wage, whilst helping to make somebody else wealthy. Perhaps now is the time for you to break the pattern, and think about being your own boss.
When considering such a life-changing decision, there are many factors to consider. The first is which sector you want to operate in. Some people will want to stick to what they know, and choose a business in the industry sector they have previously worked in. Many, however, will choose a new sector in which they have no previous experience. This is possible in franchising, unlike self-employment, because the franchisor will have a proven system and track record, and should offer full and detailed training, help and support, giving you the skills that you will need to succeed in a new venture.
You will also need to decide upon the investment level that you can afford, or are willing to commit to a new business venture. There are franchises at all levels of investment, ranging from under £10,000, up to over a £1million investment. Often a franchise fee will include a turn key package of equipment and stock, however sometimes there are additional expenses on top of the franchise fee. A prospective franchisee should investigate this carefully, and also consider how long it will take to reach profitability, and therefore how much additional working capital they will need. Whilst only around half of new franchisees need to borrow money, the franchise friendly banks will lend, for the right franchisor, and subject to status, between 50 per cent and 70 per cent of the required funds.
A key element to consider here is the time it will take to recoup this initial investment. As a rule of thumb, for an investment of £10,000 to £20,000, you should expect a return on investment in 12 to 18 months. For larger investments, this timeframe could be longer. You should consider the term of the franchise agreement and the renewal clause to make sure that you have enough time to both recover your investment, and build a profitable business.
Then comes the difficult decision of which franchisor to choose within your chosen sector and budget. Some sectors can have many franchisors operating in competitive markets. Often, however, a franchisor may operate in a very niche market with little competition, and may be the only franchisor operating in this market. Some people will want to join an established franchisor with many existing franchisees. Some, however, may prefer to look at an opportunity with a business, which might be new to franchising, whilst having the experience of operating their company owned outlets. These ground floor opportunities often have the benefit of having more available territories, and may even offer a lower entry franchise fee for their first franchisees.
It is a good idea to make a short list of franchises that meet your criteria, and that look interesting to you. This may include ‘safe’ options, in a sector you are familiar with, but may also include more ‘exciting’ options in market sectors you may have had no previous exposure to.
You should then apply for information on their franchise offers, research their websites, and commence your investigations. This will then lead to meetings with those that most interest you. During these meetings and subsequent conversations, both parties will decide if the other is right for them. A key point to think about is: what can the franchisor offer me for my franchise fee that others don’t, or that I couldn’t get by spending my money setting up my own business instead? The answer to this will vary from franchise to franchise, but could include better buying power from suppliers, centralised services, bespoke operating software, and many other aspects which may be specific to that particular franchise. In all cases, however, this would include being able to trade using the franchisors brand, being trained in tried-and-tested methods, and having the help and support of people who have done it before and are willing and able to help you to run your own business as part of their brand.
Every year around 3000 people make the decision to purchase a franchise in the UK. Some will take a new territory, and some will buy an existing franchise as a resale. Around two thirds of these new franchisees come from an employment background, with only around one in six having been previously self-employed.
Giving up your job, or ‘sacking the boss’ can be a daunting prospect, but can also be very rewarding. Gain control of your own future, manage your own calendar, have that work-life balance that may have been just out of reach as an employee.
Taking on a franchise is being in business for yourself, but not by yourself, and may just be that decision that changes your life for the better.
Alan Wilkinson is the senior franchise consultant at The Franchising Centre