Buy a franchise Introduction
 
Taking on a franchise is an option worth considering for anyone who wants to run a business but doesn't have a specific business idea or prefers the security provided by an established concept.

The main benefit of buying a franchise is that it has worked before so it should work for you.  Start with you;  when you wake up in the morning:  what do you want to do?  What are your skills and more importantly:  what do you enjoy doing.  Is what you enjoy potentially profitable.

First rule of business is - to make profit.  Check the franchise is profitable for you.  The franchise will secure your goels and commitments.  Write these goels down and compare to the franchise models you investigate.

The right franchise can give you a head start.  Instead of setting up a business from scratch, you use a proven business idea. Typically, you trade under the brand name of the business offering you the franchise, and they also give you help and support.

Successful franchises have a much lower failure rate than completely new businesses. However, you will still need to work hard to make the franchise a success and you may have to sacrifice some of your own business ideas to fit in with the franchiser's terms.

Buy a franchise

Taking on a franchise is an option worth considering for anyone who wants to run a business but doesn't have a specific business idea or prefers the security provided by an established concept.

The right franchise can give you a head start. Instead of setting up a business from scratch, you use a proven business idea. Typically, you trade under the brand name of the business offering you the franchise, and they also give you help and support.

Successful franchises have a much lower failure rate than completely new businesses. However, you will still need to work hard to make the franchise a success and you may have to sacrifice some of your own business ideas to fit in with the franchiser's terms.

This guide will help you decide whether franchising is for you. It shows how you can find the right franchise, and highlights the key issues you need to consider.

What is franchising?
The term "franchising" can describe some very different business arrangements. It is important to understand exactly what you're being offered.

Business format franchise
This is the most common form of franchising. A true business format franchise occurs when the owner of a business (the franchisers) grants a licence to another person or business (the franchisee) to use their business idea - often in a specific geographical area.

The franchisee sells the franchisor's product or services, trades under the franchisor's trade mark or trade name and benefits from the franchisor's help and support.

In return, the franchisee usually pays an initial fee to the franchisor and then a percentage of the sales revenue.

The franchisee owns the outlet they run. But the franchisor keeps control over how products are marketed and sold and how their business idea is used.

Well-known businesses that offer franchises of this kind include Prontaprint, Dyno-Rod, McDonald's and Coffee Republic.

Other types of arrangement
Different types of sales relationships are also sometimes referred to as franchises. For example:

Distributorship and dealership - you sell the product but don't usually trade under the franchise name. You have more freedom over how you run the business.
Agency - you sell goods or services on behalf of the supplier.
Licensee - you have a licence giving you the right to make and sell the licensor's product. There are usually no extra restrictions on how you run your business.
Multi-level marketing
Some businesses offer franchises that are really multi-level marketing. Self-employed distributors sell goods on a manufacturer's behalf. You get commission on any sales you make, and also on sales made by other distributors you recruit.

Be aware that some multi-level marketing schemes may be dishonest or illegal. Download the Trading Schemes Guide from the Department for Business, Enterprise and Regulatory Reform (BERR) website (PDF) - Opens in a new window.

Advantages and disadvantages of franchising
Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

Advantages
Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.
You can use a recognised brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise - the "franchisor".
The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same region.
Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
Risk is reduced and is shared by the franchisor.
If you have an existing customer base you will not have to invest time looking to set one up.
Relationships with suppliers have already been established. 
Disadvantages
Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing royalties and you may have to agree to buy products from the franchisor.
The franchise agreement usually includes restrictions on how you run the business. You might not be able to make changes to suit your local market.
The franchisor might go out of business, or change the way they do things.
Other franchisees could give the brand a bad reputation.
You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.
Reduced risk means you might not generate large profits.

Should I buy a franchise?
As with any new business venture, you need to consider carefully whether you have got the right skills and attitude to run a successful franchise. Analysing your own temperament can also help you decide which type of franchise would be right for you.

Assess yourself
You must be prepared to sell and you will need entrepreneurial flair. A franchise gives you a business blueprint - but it won't automatically give you customers.
You'll need to work hard, probably for long hours. Do you have the necessary dedication?
Running your own business can be stressful. Think how you react to pressure.
You may be starting up in business because you want to be your own boss. If so, would you be happy with the restrictions imposed by a franchise arrangement?
On the other hand, you may want to limit your risk. You might be more comfortable with a franchise than starting a new business from scratch.
The right franchise for you
Do you like office work? Or would you prefer a business that involves physical labour or using a particular skill?
Are you happy working on your own? Or would you be good at recruiting, training and managing employees?
Do you like dealing with members of the public? Or would you prefer a franchise where you sell to business customers?
Are you weak in particular business skills such as finance? Can you find a franchise that offers the support you need in those areas?
Take a test to find out if franchising is for you on the whichfranchise.com website - Opens in a new window.

Find out about possible franchises
You can find out about possible franchise opportunities from a range of sources.

A useful starting point is the British Franchise Association (BFA). As well as offering guidance and seminars on franchising, it provides details of members who may be offering new franchises and existing franchises for resale.

Franchises are advertised and written about in various national newspapers and in trade publications such as Dalton's Weekly and Franchise World.

Websites such as whichfranchise.com and franinfo.co.uk can be a useful source of information on franchises. You can find other listings using a search engine and employing search terms such as franchise opportunity or franchise directory.

Attending a franchise exhibition can also be a good way of finding out what's on offer. You can find details of some major franchise exhibitions on the Franinfo website - Opens in a new window.

But tread carefully. Advertised franchise opportunities - particularly multi-level marketing schemes - can be untried, dishonest or even illegal. Assess the franchise opportunity carefully and check if the business offering the franchise is a member of the BFA.

Read more about Franchise.