Franchising · 8 August 2016

Franchising A-Z: H A head start in business

Head start
Coudl franchising provide the head start to business ownership you’re looking for?
Franchising offers those who aspire to become business owners a head start, without the need to develop a format for themselves, writes our expert ServiceMaster’s David Burton.

Buying into a franchise can be a fantastic way to start your business. The model has already been developed, the brand has been established, and the franchisor has already invested in a support team to help provide every chance of making your venture a success.

With the right attitude, and a developable aptitude, franchising might just be the right option.

Risk is a phrase more commonly associated with the insurance industry, but any aspiring investor should be looking to reduce risk upon starting a new venture.

Franchising offers a reduced risk option, as well as an increased likelihood of securing finance, as it is well known that major banks are more willing to lend finance required to invest in franchise opportunities.

However, franchising is not for everyone, and it isnt a guarantee of success. Like starting any business, franchising requires hard work, investment and trust in the franchise model.

Due diligence is required from both franchisor and franchisee before any investment takes place. Ask yourself: Can I work with these people? Do I like the proposition? Will the investment achieve a return to suit my requirements

Franchising works because the model is proven and the brand and business format has been developed, but if the idea of someone else making suggestions and providing guidance on what to do with your business does not appeal to you, then you may want to reconsider whether a future as a franchisee is right for you.

With that in mind, here are four reasons why franchising can provide the head start to business ownership you’re looking for.

(1) Increased survival rates

Around 80 per cent of businesses are expected to fail in the first 18 months, while The Bank of England also claims that a third of UK businesses are not profitable.

But UK franchising is on the up. According to recent research conducted by the British Franchise Association (BFA) and NatWest, there are over 44, 000 franchise-owned businesses in the UK an increase of 14 per cent over the previous two years. The research also stated that 97 per cent of franchise-owned businesses report profitability

(2) you’re operating a proven business model

The beauty of franchising is that the business model already works. it’s been proven to work and, with a dynamic franchisor at the helm, should continue to do so.

According to statistics from CB Insights, startups often fail because they provide a service or a product that nobody wants, but since demand is already proven with a franchise, you’re already one step ahead.

(3) you’re more likely to receive financial support from banks

Most franchisors, certainly those that are members of the BFA, will have relationships with lenders you can access. You can always leverage your own financial support from your own bank and request information on the franchisor whilst you’re there.

If a lender is willing to provide the information, this demonstrates that they are supportive of the business model and the franchise opportunity.

ServiceMaster requires investors to raise at least 30 per cent of the finances required, the remaining 70 per cent of which can come from approved banking lenders.


 
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ABOUT THE EXPERT

David Burton is the communications executive at ServiceMaster, one of the UK's longest established and largest multi-brand franchisors. With a background in public relations, he provides communications support to the 350+ ServiceMaster franchises and is an advocate for franchising as a proven route to business success.

Business development