In these times of economic uncertainty, franchising provides the perfect opportunity to start a business – last year it contributed ?12.4bn to the UK economy, and that figure is set to rise this year.
Starting a business with someone you know may seem like a good idea as it removes the inherent loneliness of some business start-ups; but conflicting views may occur when a decision has to be made such as, the name of the company, the style of the brand, or mechanics of the operation, causing stresses on the business and the relationship itself. Franchising reduces, if not removes, many of the hurdles that can flaw many start-up businesses. But is it easier to run a franchise with a close friend rather than starting your own business from scratch?
Why franchising works
Franchising does not automatically mean that you can start a business with your partner and live happily ever after. Hard work, dedication and a professional approach is required. However, many of the stresses put on the relationship are removed simply by the fact that a franchise provides a proven business model.
Friends and families who are in business together do not always put into practice a good business plan, as they can spend more time talking about it, and generating ideas than actually implementing them. With a franchise you can avoid the ?dreaming stage? and get involved in actually making the business work, rather than worrying and arguing about the fundamental start-up decisions. The brand is already established and all the other aspects are already set up for you.
Franchising gives an essential structure of support, management quality and cost saving. A franchise business model allows a successful business to replicate itself by bringing in new franchise owners to run new outlets, under licence and agreement.?
It’s all on paper
When entering into a family/friend business partnership the tendency might be to neglect formalities, which can cause problems later on in the relationship when conflicts arise. Going down the franchise route means that these formalities are already in place and a written agreement will have had to be agreed before you start the business.
Having a licensed agreement gives you and your partner an arrangement to follow. Having straightforward black and white guides prevents any awkward decisions having to be made, leaving the franchisees free to run a driven business and make it work.
A recipe for success
You automatically become your own boss, but under the safety and security of a proven model, with national support structures put in place to help overcome many of the business hurdles that can flaw many new business start-ups. A family business has the ability to take the long-term approach without the pressure of shareholders wanting immediate returns.
Banks are more likely to invest in a franchise than a new start-up business, due to the robust business plan which automatically eases the tension between you and your partner. Knowing you have financial backing from a bank can prevent unecessary stress on the business. Banks will only lend up to a maximum percentage of the value of the franchise, so having a close friend on board can help out with further investment, which creates a sense of personal ownership of the business.
With any business day to day stresses will get in the way and usually two heads are better than one, but with franchising you receive constant support, training and advice. Having an established brand behind you will increase your chances of success.
Going into business with someone does provide that extra edge on generating ideas, additional motivation and a diverse range of business skills. Franchising helps push these factors forward as it is already a working businesses structure, leaving you and your partner free to be creative and enjoy the success of running your own business.
Further information
The British Franchise Association (bfa, http://www.thebfa.org/) is the voluntary self regulating governing body for franchising formed in 1977 by the major franchising organisations looking to accredit and promote those franchise systems that meet the strict ethical and business criteria of a good franchise.
The bfa hold a full list of all of its members and the code of ethics to which these members subscribe to on its website: www.thebfa.org
Wiki
The term ‘franchising’ has been used to describe many different forms of business relationships, including licensing, distributor and agency arrangements. The more popular use of the term has arisen from the? development of what is called ‘business format franchising.’
Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.
