Data from the Office of National Statistics showed there were roughly 4.39 million self,employed in the UK as of Q4 2024 , up from 3.3 million in 2001. This had peaked though at 4.8 million pre,COVID. Since then, there has been “cleansing”.
What these figures indicate though is a continuing desire to run our own business; and with ever,continuing economic turmoil, political displacement and general market instability (which I further forecast will continue almost as a matter of course) this desire to own a business will only increase.
There are many good reasons for wanting to be business owners:
- Work/life balance
- To work with family
- Job security
- To oversee their own destiny
- Wealth creation
- Because “I have always wanted to run my own business”
In my opinion, however, the ability to be in control of something overrides all of the above, given individuals cannot affect wars, starvation, international crises, stagnation, inflation, or recession.
Moreover, we also cannot control corporate bankruptcies, market credit crises or international barriers to entry. In most cases we are impotent. If you own and run your own business though you can have control, reap direct benefits for your efforts and make the decisions that do have an impact.
In short, owning your own business means you can go from impotent to becoming important.
Why franchising?
In my nearly 30 years in franchising, I have never heard of anyone waking up in the middle of the night screaming “I must become a franchisee” , it simply does not happen. Franchising is something that sneaks up on you and is usually the result of some external action, be it redundancy, lack of progress at work, taking early retirement or simply because at a point in time you decided you could do better working for yourself, rather than making money for someone else.
Making the decision to want to run your own business is one thing – finding out how is entirely another.
Often the thought of becoming a business owner means many people rush headlong , like lemmings , into making instantaneous decisions without considering the consequences. I have met the eager, the considered, the timid and the confident who, in the process of wanting to become franchisees, all come into franchise interviews with one desire – “I want a business.”
But you need to know where to start, where to get advice and what questions to ask.
The following six steps will help you through the process
Step 1 – initial assessment
A good franchise needs to have at least the following: a proven business history, documented systems, an effective training programme, security of tenure, an ongoing support structure, and membership of the British Franchise Association.
Do some initial research online about the franchise that is of interest to you. The franchise category of interest, better known as the industry, is an important one to note at this point too. This initial assessment will enable you to narrow down the franchise field to only those that appeal.
Step 2 – funding
This is critical and should appear very early in the process. A franchise is not a job; it is an investment and as such needs to be carefully planned and costed. Do not over-invest no matter how exciting the business appears – only invest what you can manage.
Work out exactly how much you need and most importantly how much you can afford. It is amazing just how much money people do find squirreled away, be it in investments, shares, ISAs, cash, assets including your house, car and of course, family. In addition, major banks will generally lend up to 70% of the total cost of an established franchise; plus, there is the government-backed start-up loans scheme as an added funding option.
Step 3 – evaluating the market
These 10 questions will give you a good start: Is the market robust? Can you see the market getting stronger? Can demand be sustained? Is the market fragmented? Is the industry growing or declining? Is there a lot of competition? Are the competitors aggressive or passive? Are there multiple income streams available? Can you see new business opportunities? Do other industries have products and services that could compete? You are looking for markets that are large, robust and accessible.
Step 4 – compare franchisors
Steps 1, 2 and 3 will have enabled you to narrow down your options to two, three or four potential franchises. Use the BFA, Companies House, franchise magazines and websites to do further desk research. Learn how they promote themselves, who they are looking for and how they position their brand. Visit franchisors armed with questions which specifically go to the heart of their business: market size, competition, level of repeat business, scalability, level of support, franchisee turnover and anything else that is important to you.
Never attend a meeting without questions. Ask to speak to a selection of franchisees – if they refuse then walk away. Good franchisors will insist you meet existing franchisees and when you do, ask specifically about their relationship with the franchisor, the support they get, how their business is trading, and how long it took to reach break-even point.
Step 5 – professional advice
You have done loads of research, put in lots of hard work and you have now chosen your preferred franchisor. Now you need people who will help you to understand the small print. Banks will help you to sort funding.
A franchise lawyer needs to look at the franchise agreement. An accountant will help draw up a business plan. A franchise consultant can provide overall guidance. Franchising in the UK is well established; there are many good advisors in the marketplace and most banks have specialist franchise management.
Step 6 – make a decision
Ten final questions to ask yourself: Do your strengths and weaknesses match the success criteria? Can you really afford the business? Is it a good investment? Will the ongoing rewards meet your expectations? Is there potential for expansion? Can you take the pressure? Are you confident in the franchise company? Are you going to enjoy yourself? Are you prepared to work very hard to achieve success? Will you follow the franchisor’s system?
If you have methodically gone through all five steps and answered these 10 questions yes, then you are ready to become a franchise owner. Well done and good luck.
