1. What Is a Franchise in Business?
A franchise is a business model where a person (franchisee) buys the right to operate under an established brand name (franchisor). The franchisee runs a local branch of the business using the franchisor’s products, systems, and branding in exchange for fees and royalties.
2. Key Components of a Franchise
- Franchisor: The original business that owns the brand, trademarks, and operating system
- Franchisee: The individual or company that buys the right to operate a business under the franchisor’s name
- Franchise Agreement: The legal contract outlining the terms and obligations of both parties
3. Common Franchise Industries
Franchises exist across various sectors in the UK, including:
- Fast food (e.g., McDonald’s, Subway)
- Fitness and gyms (e.g., Anytime Fitness)
- Coffee shops (e.g., Costa Coffee)
- Cleaning services
- Property and lettings agencies
- Childcare and tutoring services
4. How Franchising Works
Here’s a simplified flow:
- The franchisor licenses their business model and brand
- The franchisee pays an initial fee and ongoing royalties
- The franchisor provides training, systems, and support
- The franchisee runs the business and earns revenue
- The franchisor earns from fees and expanded brand exposure
5. Advantages of Buying a Franchise
- Proven business model: Lower risk compared to starting from scratch
- Brand recognition: Instant customer trust and awareness
- Training and support: Provided by the franchisor
- Marketing and supply chain: Centralised and efficient
- Easier financing: Banks are more likely to fund franchises
6. Challenges of Franchising
- Initial investment: Can be high, especially for major brands
- Ongoing fees: Royalties and marketing contributions
- Less freedom: Must follow franchisor rules and branding
- Dependence: Your success is tied to the franchisor’s reputation
7. Franchise Costs Explained
Typical costs include:
- Franchise fee: Upfront cost to buy into the system
- Setup costs: Equipment, premises, inventory
- Royalty fees: Regular percentage of turnover
- Marketing fees: Contributions to national or regional campaigns
Costs can range from £5,000 to £250,000+, depending on the brand and sector.
8. Types of Franchises
- Product Franchise: Selling a franchisor’s goods (e.g., car dealerships)
- Business Format Franchise: Most common—complete package including operations (e.g., Domino’s)
- Management Franchise: Franchisee manages a team rather than working hands-on (e.g., cleaning services)
9. Franchise Examples in the UK
- Food: KFC, Greggs, Domino’s
- Retail: Boots Opticians, CeX
- Property: Belvoir, Martin & Co
- Education: Kumon, Tutor Doctor
These brands provide frameworks and support, making it easier for new business owners to succeed.
10. Is a Franchise Right for You?
Consider franchising if you:
- Prefer a structured business system
- Have capital to invest
- Want support and training
- Are comfortable following rules
- Seek a balance between entrepreneurship and safety
Frequently Asked Questions
Is a franchise considered self-employment?
Yes, franchisees are self-employed or operate as limited companies, depending on structure.
How long is a franchise agreement?
Typically 5 to 10 years, with renewal options if performance standards are met.
Can I sell a franchise?
Yes, most agreements allow resale, but the franchisor usually must approve the new owner.
Are franchise profits guaranteed?
No. While the model is proven, success depends on your management and local market.
Can I own more than one franchise?
Yes. Many successful franchisees own multiple units or different brands.
Do I need experience to buy a franchise?
Not always. Most franchisors offer training to prepare you for operations.
Conclusion
Understanding what is a franchise in business opens the door to one of the most stable and supported ways to become your own boss. With lower risk, strong brand backing, and a built-in support system, franchising offers a solid path for aspiring entrepreneurs—especially in the UK’s diverse and growing franchise market.