Franchise FAQ's

Are all franchises members of the BFA (British Franchise Association)?

Not all franchises are members of the BFA. It is important to remember that there are approximately 800 franchises in the UK and less than one quarter of these are currently BFA members. Some will be members of other organisations such as the International Franchise Association (IFA) and some may not be members of any organisation.

Are there more fees to pay?

For premises based franchises in particular, you will require additional investment on top of the franchise fee. Most franchisors will also advise that you have some additional working capital to account for the first few months of the business becoming established. For exact amounts, it is important to check with the individual franchise.

Can I get references?

Most franchisors will allow you to speak to existing franchisees when conducting your research/due diligence into the franchise. You can then ask them how successful they are and get a clearer view of whether the franchise is right for you.

Can others get involved?

Most franchisors will not have a problem with you setting up on your own, as a limited company or as a partnership, although this is best checked first as each one is different.

How much can I make?

Most franchises will allow you to view their accounts prior to purchasing the franchise so that you can be sure that the projected income figures for franchisees are achievable. You can also ascertain this to some extent by speaking to existing franchisees.

How will I get my customers?

Each franchise should have proven sales and marketing systems in place which will enable you to generate business. These may include online and offline advertising or leaflet drops for example.

What are the Benefits?

  • You don't have to come up with a new idea - someone else has already had it and tested it!
  • Larger, well-established franchise operations will often have national advertising campaigns and a solid brand and trading name.
  • Good franchisors will offer comprehensive training programmes in sales and other areas of business to help you make a success of your franchise.
  •  Good franchisors can also help secure funding for your investment as well, for example discounted bulk-buy supplies.
  • If your customers are aware that you are running a franchise, they will also understand that you will be offering the best possible value for money and service - although you run your 'own show', you are part of a much larger organisation.

What are the Cost Implications?

The franchisor will receive an initial fee from the franchisee, payable at the outset, together with on-going management service fees - usually based on a percentage of annual turnover or mark-ups on supplies (which you may be obliged to purchase from the franchisor). In return, the franchisor has an obligation to support the franchise network, notably with training, product development, advertising, promotional activities and with a specialist range of management services.

What can I expect for my money?

Each franchise will offer a different package in return for the franchise fee.

Typically this will include:

  • Training course
  • License to operate under the Franchisor's name
  • Operation manuals
  • Business/finance support
  • EPOS system and other software
  • Office set up
  • Help with finding premises if applicable
  • Specially negotiated supplier terms if applicable
  • Uniforms/stationery
  • Launch Marketing e.g. PR, Leaflets, Press ads, Promotional offers, Local Marketing, Online Marketing.
  • Call answering / appointment booking services

What do I get for my monthly Fees?

The Management Service Fee will usually go towards paying for the support services provided by the franchisor to the franchisee. A support network is a major advantage of buying a franchise over setting up a business alone.

For example, there may be a dedicated Franchise Support Director in place that will be your first port of call for any problems. It may also go towards ongoing marketing by the franchisor and training events for franchisees. Franchisors whose success depends on the success of the franchisee in this way, will be more motivated to help you to succeed.

What if I change my mind?

You must check the franchise agreement, take legal advice and adhere to all the clauses relating to the resale. It is unlikely that you could simply ‘hand it back’.

Get your franchise agreement checked by a solicitor and make sure you understand the ‘what if’ scenario so that there are no surprises should you change your mind.

If you take on a franchise and then change your mind, there are a number of routes to selling it. After all, there are likely to be others in the market looking for a franchise like yours in the same way as you were when you bought it.

What is a Franchise?

In a nutshell, it is the granting of a licence by a business owner to another individual, which allows them to develop their own business using the trademark, name, know-how and business systems of the franchisor.

There are a wide variety of franchise opportunities available in the UK across a broad range of industry sectors. Generally most well-established franchise systems offer a tried and tested business model with initial training, ongoing support, brand recognition and the collective buying power benefits that a network of businesses can bring (such as better buying power).

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 of all the elements necessary to establish a previously untrained person in the business and to run it on a continued assistance basis.

When do I pay?

This will depend on the franchise in question. Some will have payment plans in place whereby you can pay the full fee in a number of instalments. Others may require the full fee to be paid up front before you can begin training/trading. Banks are usually quite keep to lend money to new franchise operations based on a proven track record of other similar franchise startups.

Who is in Control?

Each business outlet is owned and operated by the franchisee. However, the franchisor retains control over the way in which products and services are marketed and sold. They will also control the quality and standards of the business.

Will they help me to find premises?

If you are interested in a premises based franchises, help will often be on hand to help with securing a location. Many franchises will advise you to investigate available premises within your local area and places you think would be good locations for the franchise of interest. They will often then send a representative from the company to help you to decide which one would be most suitable. Some franchises even have links with commercial real estate agents who can help you to secure leases etc.