Why Franchising Is Becoming Increasingly Popular?

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.

Brand Recognition

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.

Compliance

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

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.

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