Working in the financial sector, but fancy having your own business?
You might be surprised by just how many people leave or retire from well-paid jobs in the financial sector to enter the world of franchising. It’s not a surprise to anyone already involved with the industry of course; we work closely with all the major franchise banks and they are as happy to offer funding for a strong franchise model as they have ever been.
Franchising really does stack the cards in your favour; someone has built a strong business, created a brand, proven a business model, properly documented the systems and procedures and then provides you with all the training and on-going support you’ll need to make your business a success.
Every year NatWest and the British Franchise Association produce a report on the industry and “as a sector, it has evidenced considerable growth where others struggled during the downturn. From 2008 to mid-2013, while the UK economy shrank by 2.5 percent, franchising performed remarkably: revenues up 20 percent; the number of franchisee businesses up 7 percent; and 11 percent more brands using franchising as their expansion model.”
Given the well-documented failure rates for independent start up businesses, the fact that the report showed 97% of all franchise units to be profitable is really quite remarkable – as well as very attractive to someone who wants to go into business for themselves.
This relationship between the Franchisor and Franchisee is bound together legally by a franchisee agreement. This sets out all the terms under which the franchisee will operate, including the standards that have to be maintained. The franchisee will pay a one off franchise fee and agree to pay an on-going monthly percentage of GP called management service fee (MSF). The franchisor provides (in most cases) an exclusive territory, a five year renewable licence to operate and comprehensive training and support. Generally speaking the more the franchisor provides on an on-going basis, the higher the percentage of MSF.
If this sounds a bit like ‘buying a job’ it’s not. The business is yours and it will be up to you to put in the hard work required to reap the benefits. The right to sell that business outwith the renewal periods varies between franchises, however you should expect the franchisor to have the right to approve the buyer.
Needless to say you won’t learn everything you need to know about franchising from a single article. Fortunately there are lots of places and people you can turn to for advice and guidance. The best place to start is with the British Franchise Association thebfa.org who can provide you with lots of independent advice on what to look for in a brand and how to approach a business you’re interested in. Figures vary, but it’s widely accepted that there are more than 900 franchise brands in the UK – some fantastic, some not so much. Choosing the right one for you can be made much easier with careful planning and taking your time.
Many people look for something completely different to what they may have spent their career to date doing. For example, you might think that what you really want to do is get outdoors and build a business that keeps you active and healthy and learn new skills? You could look at a garden maintenance franchise. You might want to put your management skills to the test in a brand new sector, so perhaps a food franchise could be the way to go. Or if you simply want to keep more of the money you make for yourself and be your own boss doing what you know, then there are plenty of white collar franchises that will suit you perfectly.
Buying a franchising can be the beginning of a great and rewarding adventure, but you must take advice and most importantly, be honest with yourself about what you want to achieve in terms of income and work/life balance. Good luck!