Entrepreneur Nigel Toplis makes a strong case in favour of being a franchisee, rather than an independent business owner.
Franchising is neither an industry in its own right, nor a business. But it is the fastest growing and most consistently successful way to deliver products and services. That well-worn phrase about ‘being in business for yourself, but not by yourself‘ still captures the essence of franchising.
If you open your own business you are responsible for every aspect of it. However, with franchising, you get all the benefits of being your own boss but are supported by an efficient head office team, which is run by the franchisor. In addition to being given access to the brand, the franchisor is there to provide the franchisee with his or her experience and know-how.
For the price of an agreed fee, the franchisee will follow a proven system, and have access to marketing tools, technical guidance and the brand’s trademarks. They will also be given sales training. And when they start trading, the new partner will be able to take advantage of the brand’s corporate identity, which may already enjoy a sizeable and popular national profile.
It can also be easier to access funds when buying into an established franchise. Successful franchisors usually have good relations with all banks and, as such, it is often easier to get funding as a franchisee rather than as an independent business owner.
Running your own independent business can be lonely and expensive. With no one to turn to for advice, or specialist support services such as marketing, training, and business development, the only option is to pay for outside suppliers. As a franchisee, access to all these services is included in your franchise package or is heavily subsidised.
Once you have set up your franchised business you will be able to network with other franchisees. These existing partners will be happy to offer you advice. By being part of a bigger group of people you will be able to enjoy economies of scale, when it comes to buying services and supplies. You will also benefit from research and development undertaken by head office.
Successful franchisees come from all walks of life. But what they all have in common is a desire to succeed, while understanding the need to work hard. They also realise the importance and benefits of following a franchise model and agreement to the letter. Your chosen franchise model has been tried and tested so often – and from time to time tweaked by the franchisor – it’s rather like following instructions for a recipe.
So what are the disadvantages of being a franchisee? If you set up your own business you can do whatever you want with it. But as the owner of a franchise territory, you sign a legally binding agreement to meet the expectations of the franchisor. There’s little point becoming a franchisee if you want to do your own thing and not be part of a bigger network.
But here are some vital statistics: As many as 80% of start-up businesses fail within two years, according to a survey carried out by NatWest and the British Franchise Association. Now contrast this with the statistic that over 90% of franchisees are still in business at the end of the same period – which is an overwhelming endorsement in favour of franchising.
