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The secret to franchisors’ bullishness explained

Written by David Glover on Thursday, 14 February 2019. Posted in Analysis

The recent bfa NatWest Franchise Survey shows franchisees and franchisors’ confidence in their own businesses continuing to increase whilst faith in the overall economy was at its lowest point since 2011. Why is that?

The secret to franchisors’ bullishness explained

I often wonder why franchising hasn’t become an automatic consideration for most people wanting to start their own business. In the last decade, we’ve gone through two periods of serious economic and political uncertainty and each time the franchising sector has come out on top. During the 2008 recession, franchising saw an unprecedented albeit small upturn, although larger in some cases, while similar independent businesses experienced a flatline or decline.

As people have pondered the effects of Brexit on their businesses and then almost given up trying to predict the future as negotiations and resolutions flounder, it’s unsurprising that franchising’s most comprehensive survey shows us having an all-time low confidence in the general economic outlook since 2011. Yet, UK franchisors and franchisees conversely feel even more confident in their own businesses. What is it that gives us so much more belief than many of those outside of our franchising circle? 

I’ve worked in franchising for more years than I’m prepared to own up to and I don’t think we need to look far to get the answer to this confidence conundrum. I think it’s all down to the exact same reasons people choose to invest in a franchise in the first place – and why we’ve seen the growth in multi-unit franchisees. In 2013 the bfa NatWest Franchise Survey began asking franchisees about multi-unit ownership. At that time 25% said that they owned more than one unit. By 2015, this had risen to 29% and in this year’s survey 36% said they owned more than one unit. There are three common barriers to joining a franchise. If you can address these, then coupled with our positive outlook phenomena, franchising should move up to your number one business investment plan.

Firstly, some people will look at a franchise fee and think of it as an expensive way to start a business but, when you take a step back to look at the startup costs of a new venture, you suddenly realise how much you could be saving – not just over the short term but long term too. Think about coming up with a brand – how long does it take you to figure out a company name that sounds like it could be a commercial success, never mind the imagery and the business culture that should go hand in hand with it? Add to that the website design and the words you use to sell your product or service – can you do that yourself or do you need to hire someone? When you have an existing franchise brand and a support team to help you set up the essentials, you soon see the benefits.

Secondly, you may think your favoured product or service already has too much competition for clients in your area. This is often a consideration for people looking at in-home care franchises like ours, as well as property, fitness and children’s services franchises. The beauty of a franchise is that their support team will have taken into account the competition and demographics of your chosen area before offering it as a viable territory. You’ll need to complete a business plan, whether you need it to secure funding or not, and this will be fed by market research and local knowledge. In our case, the growing need for social care for our ageing population far outweighs the number of providers in every community and you’ll find similar statistics for other industries too.

Finally, your friends and family warn you that you won’t be working for yourself if you join a franchise. You’ll probably have to pay a monthly fee to the franchisor and you’ll have to do things their way – why not just get another job? Of course, they’re right. You do have to follow a franchise system because it’s a proven model – proven to create a successful business for their network of franchisees. But do they treat you like an employee? Absolutely not. Some of our best innovations in care delivery have come from suggestions within our network of franchisees and you’ll find other franchisors saying the same thing. So, we may charge a monthly fee to cover the costs of our support team or national marketing activities, but they are for the benefit of everyone. If this is the first time you’ve heard it when looking at buying a franchise, it certainly won’t be the last – your success is our success. And it’s likely that this phrase is a major reason why the UK franchise sector retains such a positive outlook.

About the Author

David Glover

David Glover is Caremark’s managing director and the bfa forum chair for London and the south east region.

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