The entrepreneurial spirit is an incredible phenomenon. It drives individuals to seek out a way to be their own boss and manage their own company. These individuals drive the engine of economic success – small companies. Regrettably, four out of 5 new companies fail within 5 years. In contrast, 91% of new franchises are profitable.
A franchise is a business that is owned by an individual (franchisee) but branded by a major organization (franchiser). Start up expenses in the United Kingdom range from £25,000 to £250,000. There are on-going managing fees too. This could be a percentage of profits or inflated costs for supplies using the excess going to the franchiser. This fee covers marketing, training, new product development and specialized management services. The theory behind franchising would be to control expenses by providing a broad spectrum of goods and/or services in the franchise headquarters. The franchisee should also remember to figure in rent and construction costs.
The franchiser controls the supply chain, attempting to get the best costs for its franchisees. Sometimes this is done with national contracts and some are at the local level. In some cases the franchiser actually makes products for sale in the franchise stores.
Every franchise location is under the direct management of the franchisee. However, when purchasing the franchise, the franchisee agrees that he is going to be bound by the direction from the franchiser over marketing, high quality management and good company practices. Even so, within the beginning be prepared to work for long hours, have little help and be jack-of-all trades in your company.
You will find three ways to buy a franchise.
One, directly from a franchiser. Two, using the help of a broker. A franchise broker could be helpful in that he represents many franchisers and will assist you in selecting a franchise that meets your need. Usually, they are paid a finders fee in the franchiser. One should be careful when using a broker that he does not steer you to the companies where his take is high. The third way is to purchase an already existing franchise. The benefits to this are you will have an opportunity to see the books, get an insiders understanding of how the franchise works and usually have much more information to work with than with a startup. About the other hand you may or may not be able to go to training at the franchiser which is a big deficit.
A franchise is an excellent way to enter a company as it offer continuous support. Consumers are generally familiar with a the goods and service of a franchise. Franchises have a 91% success rate versus an independent whose five year survival rate is 20% on average. Franchising is the best of all worlds. You own and operate your company but have significant assist from the franchiser.
Find more information about Franchise Business Opportunities at Smarta