Buying A Franchise?
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There are a number of different types of franchise:
Too many over-eager, first-time franchise investors leap in without understanding the rules of a franchise relationship or the background of the industry or company they have selected. If the potential franchisees don't know what they're getting in to, or pick a marginal company, it may be years before they begin to see any return on their investments. They can easily lose their investments entirely. |
Buying A Franchise Business
Starting Your Own Business
Product choice
There are very few franchises available dealing in jewellery, clothing, craft, leather, furniture, lighting and art work. Pronuptia is one well known one but please research what this involves. You may not like how a franchise operates when you look into it. See here for a salutary tale.
You have an enormous choice of products on offer. You choose your own product mix. This is not actually that hard. What is probably a greater worry is knowing where to source them, but with our business model, not only can we show you where but you can buy from ethical manufacturers offering exceptional value.
Established customer base
This is a major part of your choice to run a franchise. You should gain a certain % of customers that already trust the brand. This seems to be very effective with catering outlets.
Many retail outlets open to a steady flow of customers. They are not like restaurants that have to build a reputation, you have people on the high street looking to buy. If you have selected desirable products you will draw in customers.
Advertising
You will have the advantage of the brand advertising, but there will be a yearly fee to cover advertising costs for the brand. You will also need to do local advertising to raise awareness that you are there. This can be quite expensive.
Advertising can be surprisingly good value. We can show you how to have 5,000 leaflets printed and delivered locally for around £250. You can even place ads in national magazines for less than £350 for a quarter page. Most independent retail businesses spend less than franchisees on advertising.
Shop Fitting
This is all taken care of for you. You will have to pay the price but you know what you are getting. Generally frachisors will need to approve a location to ensure it doesn't break any franchise rules and that health and safety standards are maintained.
For retail operations all you really need is a clean well painted shell into which you put your display units and counter. You should get quotes from carpenters and building firms, not just those that specialise in shop fitting. You must make sure that you do not break any health and safety regulations, though leased shop units should already meet these legal requirements.
Product Selection
All selected for you. You know exactly what you are selling. Of course there is no room to expand product lines or adapt to local demand. Occasionally you are allowed to include 10 or 20% of products from alternative suppliers but nearly always you have to buy fom the franchisor.
You have total freedom to choose which means you can sell something you really like and adapt to local demand. On the other hand bad product choices that don't sell can be expensive mistakes.
Set Up Cost
Franchise Fee + all the normal business setup costs.
The normal business setup costs.
Creativity and initiative
You are working to a formula so there is little room for initiative. Some franchises can be very restricting, as one franchise holder expressed it "Big brother interference, restricting the spirit".
You are truly working for yourself. You will be constantly learning new aspects of the business and adjusting what you do to meet your customers needs.
Ongoing fees
Franchise % of turnover and perhaps an annual fee and an advertising fund payment, even extra Franchise administration and accounting costs.
No additional fees
Business Reputation
You are exposed to bad practices in other franchise operations. Bad publicity in any part of the franchise operation will damage your business too.
You have complete control over your business so your reputation is down to your good business practices, including issuing refunds. With good product margins you can easily afford to refund damaged or faulty goods.
Dependent on Franchisor
If the franchisor business fails then you lose all of your suppliers and branding advantage. You are also locked into the prescribed suppliers of products, packaging and stationery.
No dependency.
Expansion
Normally your only option is to open a second outlet. Increasing floor space rarely makes any difference to sales, just increases your costs.
You can open a second detail outlet, again, increasing shop floor space in an existing unit is not usually cost effective. You could franchise your own business and package this for sale. If you don't want to do this yourself then there are companies that will put the whole offer together for a fee. You are probably looking at around £7,000 - £8,000 for their services.
The difference between a franchise and starting your own business, is your ability to select good merchandise that people will want to buy. We can recommend products that we know sell very well and we can guarantee a sales margin where you can test a wide range of products and identify your own best selling product ranges. This may be a deal breaking difference, but if you relish the opportunity to build your own business with total freedom and do your own buying then you really should consider our proposal.
Apart from this distinction, everything else is more or less the same, you still need to find a premises and buy your stock.
What may be a big advantage to some is that we are really selling three businesses in one.
- Independent Retailer
- Wholesaler
- Internet Trader