What You Need To Know About Opening A Franchise
What your chosen franchisor can do to ensure your profitability
Opening a franchise can be daunting. For those who have run a business in the past or have senior experience at an organisation, the hiring of employees and business plan elements of franchising will be familiar. That being said, the costs and franchisor chain of command may be disorientating for those used to a certain corporate atmosphere.
There is a wide-ranging list of considerations you need to make if you intend on leading a successful franchise. So, to provide you with the necessary tools and techniques to escape the rat race, we’ve compiled some essential steps to opening a franchise.
Understand the logistics
One of the first practical questions to ask when opening a franchise is “what’s it going to cost me?” Now, the cost of opening a franchise depends on the nature of the franchisor. They may be an organisation that involves several shopfitting costs, or a small niche business model that requires your hands alone.
Keep in mind that, at most organisations, you’ll be expected to pay a deposit and training fees. Beyond that, costs will depend on whether or not your franchise requires a physical premises or can be operated using your own vehicle and skill set.
There are then the costs incurred the moment you start. Whether that’s travel between customers, specialist tools to service clients, or hiring employees as you begin to grow.
Your franchise business will also have an inventory just like any organisation. Be sure to investigate how much that typically costs to stock in your meeting with the franchisor, and whether or not there are discounts available to franchisees.
Existing franchisees will be familiar with juggling such expenditure and can advise on ways to market yourself and grow on a budget. Simply reach out to those within your chosen network ahead of your discovery day.
Determine a likelihood of success
Of course, when you ask how to open a franchise, what you really want to know is how to choose a successful one and what it takes to open it.
It’s important to bear in mind that failure rates in franchising generally remain below 5%. Regardless of the franchise you choose, it will have better chances of success than a small business.
There are more than 44,200 franchises on the high street and 90% of all startup franchises report profitability in the first two years. Compare this to the 50% of independent businesses that fail in the same time frame, and it’s easy to understand why franchising is so popular.
Once you’ve reached profitability, you’re set to join more than 50% of franchises who claim an annual turnover of over £250,000. You won’t be starting your own franchise in the same way you would a small business, after all; you’re buying into a model that is already proven to work and has a wealth of clients invested in your overarching brand.
Your role after buying a franchise is to set up the foundations that allow you to deliver on your business plan. This will include marketing yourself to your target audience, establishing a tone of voice that resonates, and potentially hiring a team that allows you to deliver services at a high standard.
Ask about management expectations
Franchise opportunities that allow the franchisee to build a team require more considerations. For example, HR requirements involved in hiring another member of staff. Whether that’s their contract of employment or staff handbook, you may wish to discuss the franchisor’s protocol during your discovery session.
Your preferred franchisor may well have these documents ready for you to access whenever you need them. Smaller franchises, might be a lot less concise in their documentation – putting more emphasis on you as the franchisee.
621,000 people are employed in franchises across the UK. In order for this figure to grow, franchisees must act like any other reputable employer. This involves you balancing the ethics of employment, your business success and the internal tone of voice.
Think of your team as the beginning of a franchising empire. The way you manage them will have an enormous impact on the likelihood of your success.
Where we come in
Still wondering how to set up a franchise? Well, start by choosing the organisation that best suits your preferred method of working and holds a similar ethos to you.
It’s not a case of simply starting a franchise, but building on what’s already there. So, check out what other franchisees are doing. Enquire about their first two years and ask about their experiences.
Next, determine whether you want to escape the rat race only to manage a team in another setting. You may have left your previous role to avoid managerial responsibilities. If so, see what growth typically looks like in your chosen franchising organisation.
At Rainbow, we offer prospective franchisees full transparency when it comes to our onboarding process. Our team are always on hand to answer any questions you may have about our way of working.
If you’re interested in joining a franchise then please get in touch. We’ll then guide you through the process and arrange an interview should your ambitions match our model.