4 Reasons Why Franchising is Growing in the UK

Remember the law of conservation of energy? If you studied physics in school, you definitely will. It states that energy cannot be created or destroyed, only changed from one form to another.

It seems to me that the drama and speculation of the media may be confined to similar rules. The elections are over and all the nervous energy that surrounded them needs somewhere else to settle. It would appear that it has found a temporary home in the possibility of the UK exiting the E.U. and the revelation that the banks have learned very little since the economic downturn, all of which expose businesses to risks beyond their control.

The nature of business is that it is filled with risk, and that shrewd business people, with a view to the long game, should minimise their exposure to these risks as much as possible.

It’s for this reason that I believe the subject of franchising should get greater attention. Despite the fact that franchising in the UK has increased by more than 10 percent since 2008 - and there are now almost a thousand different franchise systems in operation in the UK employing over 550,000 people - it tends to come as something as an afterthought for many business people and would-be entrepreneurs.

So despite the lack of attention it receives, why is franchising becoming such a popular option for business people and would-be entrepreneurs? It comes down to three things – reduction of risk; greater variety and increased chance of success, provided you’re smart; and doing your due diligence.

Diversification

Franchising has evolved significantly over the last 30 years or so. While it was once synonymous with fast food joints, such as McDonalds and Subway, there are now literally thousands of franchise brands that cover a veritable plethora of business models and styles.

Today franchising also goes beyond tangible and visible products. The service sector with intangible services such as consulting, coaching, financing, etc. are all rapidly growing opportunities, as are home-based businesses. Our own story at The Interface Financial Group is testimony to the rising popularity of franchising in the financial services sector. Gone too are the days when you had to have an office and a visible location to be successful.

All this choice opens up the option of franchising to a much larger market, giving franchisees the opportunity to invest in an industry they’re passionate about, a key ingredient in the success of any business.

Successful Track Record

Successful franchise companies tend to be those with clear business processes that consistently deliver positive results to their customers. Over the years they have built up a track record for success that demonstrates the potential for a new franchisee. Equally, such franchises are proud of this record, and will encourage you to speak to existing franchisees to verify the claims they are making.
Investing in a business with a demonstrable demand for its product or service, and a history of success, significantly reduces a franchisee’s exposure to risk.

Established Brand

Ask anyone who has built a business from the ground up what their top challenges were, and I guarantee most will at some point mention developing a strong brand. I’m not saying it can’t be done, but it is a slow and arduous process. One of the biggest advantages of franchising is that you are buying into an already well-established brand that has a perceived value in the eyes of the consumers your business is targeting.
Again, this increases the business’s likelihood of success and subsequently reduces the risk factor.

Training & Support

A franchise without franchisees isn’t a franchise. It is in our interest to give you the greatest possible chance of success. Whereas most people who set up their own business must learn through trial and error, or the appointment of an expensive business coach, successful franchises are perfectly positioned to teach their franchisees the secrets of their success. The best franchises include a series of mandatory training programmes that new franchisees must complete at the outset in order to learn the franchise’s values, business model and processes.

Beyond initial training a good franchise continues to support its franchisees, building better, more fruitful relationships as they go. As an example, we recently launched IFG 50/50 – a system whereby IFG partners with its franchisees on a transaction, providing a major portion of the required capital, and carrying out the majority of the ‘paper work’ so our franchisees have more working capital available and more time to focus on building their portfolio.

Like any other business, franchises can’t predict upsets beyond their control, such as political upheaval, fluctuating exchange rates and market volatility, but they are an excellent option for people interested in starting a new business, who want to reduce their risks, and up their chances of success significantly.