Why buy a franchise?
Over the past few decades, the number of franchises in the UK has skyrocketed. There are now more than 900 franchised brands across the country employing around 561,000 people between them. The franchise industry contributes a significant amount to the country’s economy every year and helps to bring a wide variety of products and services to customers across the UK.
If you’re an entrepreneur currently looking for an investment opportunity, there’s a good chance that the idea of investing in a franchise has already occurred to you. Offering an increased chance of success, and better odds of becoming profitable quickly, the franchise is a popular business model across all industries.
Understanding exactly how the franchise model works, and what its particular benefits are, is essential if you’re going to become a franchisee yourself. The more you know about the way that franchises work, the easier it will be for you to decide if the business model is right for you and your investment.
Brand awareness
One of the biggest benefits of investing in a UK franchise is that, if the corporate arm of the business has been doing its job, the brand should already be reasonably well known among its target audience. In most cases businesses don’t begin to franchise until they are well established and well-liked by customers in the local area. Harnessing this reputation when expanding should help businesses to attract new customers, and slowly increase their market share, whenever they open a new location.
As a new business, brand awareness is incredibly important. A huge 50% of start-ups fail within the first two years. In most cases, this is simply because not enough people knew about or purchased their products or services. The boost that franchises receive from their increased level of brand awareness can be clearly seen when comparing survival statistics for new businesses. While nearly half of independent start-ups won’t be around in a couple of years, an impressive 90% of franchises report profitability within the first two years, demonstrating just how much of an advantage the business model lends entrepreneurs.
The brand awareness provided by the parent company helps these new businesses to hit the ground running when it comes time to launch. What’s more, in most cases franchisees will be able to use the existing marketing materials, campaigns and market research of the franchise, allowing them to further hone their marketing efforts.
Proven business model
When buying a franchise, you’ll be investing in products or services that have already proven they’re popular with customers. This means you already have a huge amount of market research and data at your fingertips and won’t be starting from scratch with launching your brand.
When looking at franchises to invest in, make sure that you visit existing branches so you can see exactly how the business works in real life. Talk to franchisees about their experience with the brand to ensure that the business model on offer really works and, if possible, take the time to try out its products or services for yourself.
Existing customer base
Without a customer base, your new venture doesn’t have much of a chance of success. When launching a new business from the ground up, it’s up to you to find these customers and convince them to try your products or services. When you invest in a franchise however, a lot of the legwork will already have been done for you. Thanks to the work already undertaken by the franchise, you’ll have a good idea of who your customers are, how to reach them and how to get them to interact with your business.
It’s impossible to underestimate the importance of a solid customer base for new businesses. Having a readymade audience for your products and services will place you well ahead of the independent competition, while on-going branding and marketing work by the franchise will further help to consolidate your customer base.
On-going support
Another important reason why many entrepreneurs choose to invest in a franchise instead of starting their own venture is the on-going support they’ll receive from the franchising brand as well as helpful franchise advice. Whether it’s in the form of training, marketing, branding support or product development, the relationship that franchisees have with their franchisor can be worth its weight in gold. This can be especially important for franchisees who haven’t run their own business in the past and allows ambitious entrepreneurs to launch their own venture without taking on all the risk normally associated with starting a new business.
Growth
Thanks to the strength of the franchise model, the franchise industry has been able to defy the many recent dips in the economy and has continued to grow steadily over the past few years. Between 2010 and 2015, the UK economy as a whole shrank by around 2.5%. During the same period, however, the contribution the franchise industry made to the economy increased by around 20%.
Between 2006 and 2016, the number of people employed by franchises in the UK increased by around 70%, with approximately half of those employed in the industry working full time. This shows just how much franchises contribute to the UK economy and suggests that the sector is in a good position to grow further in the coming years. Buy a UK franchise and you too can help to boost the country’s finances, driving your own enterprise to success in the process.
Types of franchise available
Those looking to buy a franchise in the UK will find a huge range of opportunities available. The amount required to invest in a franchise can vary significantly, with some opportunities available for as little as a few thousand pounds while other brands require franchisees to have hundreds of thousands or even millions of pounds in capital before they can invest. The type of franchise you invest in will therefore be at least partially dictated by your finances.
The more expensive franchise opportunities often require investors to purchase commercial property and occasionally even to commission a purpose-built space for their business. This can be extremely costly and it’s not uncommon for start-up costs to run into the hundreds of thousands.
More affordable franchises generally don’t require specialist premises. Van-based franchises are often among the most affordable with very little equipment required to get the business up and running. As well as having low overheads, van-based franchises generally don’t require franchisees to hire or train large numbers of staff, something that can also help to keep costs to a minimum. If you’re looking for an investment but have limited funds available, this type of franchise could suit you perfectly.
If you’re interested in finding out more about the current franchise opportunities available, take a look through the listings on our site. There you’ll find an up-to-date selection of franchise brands looking for investors as well as information on the investment requirements of each opportunity. Once you’ve selected the business you’re interested in, get in touch with the brand to find out more and to begin the application process.