The beauty of franchising

Nigel Toplis explains why franchising has become one of the most popular routes into business.

The beauty of franchising

When someone asks me to define franchising, this is what I tell them: ‘Franchise networks are a sum of their parts, where independent business owners derive success by connecting to a wider support community’.

Franchising is the fastest growing and most consistently successful way to deliver products and services to a marketplace. It is a crazy mixture of conformity and individuality. Franchising combines the best elements of big business and small operations.

That said: People do not wake up in the middle of the night and shout ‘I must become a franchisee’. But they do conclude, perhaps over a period of three or four months, or even a year, that they want to run their own business.

And there are a whole host of different reasons why they wish to become their own boss. Top of the list is the ability to take control of their daily lives and ultimately shape their own destiny. Other motivating factors include wanting to be rewarded directly for their own efforts.

They also probably want to build a valuable capital asset and there are those who have a strong desire to learn new skills. Some wish to establish a business which could provide employment for other family members.

Successful franchisees come from all walks of life. Within my own franchise networks I have a wide range of business partners, such as a cattle rancher from Patagonia, a greengrocer from Chiswick and a flight attendant with British Airways.

What they all share is a desire to succeed, along with a willingness to work hard and understand the franchise model. They all know the procedures and processes of their business to the letter. And they are extremely familiar with the small print on their franchise agreements.

Running your own independent business can be lonely and expensive. Ultimately, you are responsible for every aspect of it. However, with franchising, you get all the benefits of owning your own business, along with a raft of head-office support services.

Furthermore, the franchisor is there to provide experience, know-how, marketing tools, sales training, technical guidance and a successful business model. Franchisees will also benefit from purchasing a corporate identity, trademarks, brand name and a ready-made reputation. And once you’re a member, you can network with other franchisees to share best practice and experiences.

New recruits become part of a bigger group of people. They will enjoy economies of scale when it comes to buying services and supplies for the business. There are also the benefits of learning from research and development undertaken by the head office team.

So what are the disadvantages of becoming a franchisee?  Firstly, as the owner of a franchise territory, you will have to sign a legally binding agreement which explains that you must satisfy the expectations of the franchisor.

It is important to be honest at all times and maintain the payment of ongoing fees to the franchisor. New franchisees will have to work hard to build high levels of repeat business.

There’s little point in becoming a franchisee if you are the type of person who wants to do things differently to other members of the network. The whole point of joining a network is to follow rules and procedures laid down by the franchisor.

Franchisees must remember they are part of a bigger network. In short, mavericks do not make good franchisees. Franchising is certainly not for everyone but there is an overwhelming case to be made in its favour.

There is a well-trodden phrase which remains the key for anyone who is considering becoming part of this industry: ‘Franchising allows you to be in business for yourself, but not by yourself’.

Nigel Toplis
Nigel Toplis