In the four years to 2017, the UK franchise industry grew by 10%, now contributing 15.1 billion pounds to the UK economy. Around 621,000 people are employed within businesses operated by over 900 franchise brands – a 70% increase between 2006 and 2016. So, why is franchising proving such a successful business model and what message does that send to someone contemplating purchasing a franchise?
In a world where work-life balance is an ever-popular topic of discussion, and where redundancies are always in the news, self-employment is becoming more attractive to many people. However, half of all independent new businesses fail within their first two years whilst 90% of franchise businesses become profitable in that same period of time.
The difference is striking and here are 10 possible reasons why.
Tried and Tested Strategies
When a franchisee buys a franchise, they are buying into a business that has already proved itself in its market. The franchisor has been through the early teething problems that all new businesses face and has refined the business tactics and operations plan accordingly. In effect, a franchisee buys a business that has already undergone a test phase and is now operating as a thriving enterprise, because of the lessons learned.
The new franchisee instantly benefits from the brand recognition that the franchisor has already established within the market. This provides a great competitive advantage for the new business owner, as the consumer and business introducers should already be aware of what the brand stands for. This can help a franchisee quickly take market share.
A Proven Model
Many thousands of franchisees have already proved that the franchise model, in general, works highly effectively and can deliver tangible benefits to a franchisee. By buying a franchise, a franchisee can work within a framework that can predict the turnover and profitability that could be achieved, if the franchisee follows the model and the suggested way of doing things. This is a real ‘comfort blanket’ for a franchisee, giving them an idea of the targets that can be attained, according to what other franchisees have done, rather than operating in the dark, as most new business owners do.
It has been suggested that a Model is probably most likely to be “proven” when the franchisor has been operating for a minimum of 5 years.
Complying with sector-specific and general UK legislation can be a minefield for many new business owners, who have to fathom what they need to do and how they can be compliant with what are often limited resources. In a franchise business, the franchisor takes charge of much of this, having devised operating systems and procedures that already handle the requirements of the law and having HR and legal advisors or managers who can assist the franchisee in this regard.
Marketing is an area in which many start-up businesses struggle, partly because of cost and often because it is out of their comfort zone. By buying a franchise business, they can benefit from the marketing campaigns run by the franchisor, its marketing literature and its social media presence. This takes a lot of pressure off their shoulders, in an area beyond their comfort zone.
Whenever they need it, a franchisee can turn to their franchisor for support and gain the help they need in a particular aspect of running their business. Manuals, training guidelines and seminars are also often part of the package provided. This parental support can be of massive benefit to anyone entering into the world of self-employment. There is always someone to listen and advise.
The moment a franchisee signs their franchise agreement, they join a ‘family’ of fellow franchisees who have knowledge to share and moral support to provide, if asked to do so. This is hugely advantageous for a new business owner, as they can learn from others’ experience.
Although working alone in the running of their business at first, the franchisee can delegate non-core areas of the business, such as HR, IT, and some financial tasks, to their franchisor. This allows them to concentrate much more fully on the running of their new enterprise, generating sales through networking and building up their contact book.
As franchising is typically a safer way of building a business than just independently pursuing a business idea, banks are often more willing to lend money to budding franchisees. This can help many of those wishing to pursue their entrepreneurial dreams, if they don’t have the capital to launch a business without borrowing or being over-stretched.
Being part of a franchise network can help prevent a franchisee feeling isolated, in the way that very many start-up entrepreneurs perceive themselves to be. There is always a sounding board available at head office and people to talk to, whenever the isolation spectre looms.
Given all of these advantages, if the right person is matched up with the right franchise opportunity, their satisfaction level can be extremely high. The latest research says that 78% of franchisees say they would recommend their franchise brand to others and 91% say they are mainly satisfied with their franchise partners. When it comes to the statement, “I enjoy operating this business”, 88% say they agree or strongly agree with this sentiment.
If you wish to discover whether you have what it takes to run an Aspray franchise business, and learn more about the benefits of our franchise model, please get in touch on 0800 077 6705 or find out more at www.asprayfranchise.co.uk