1. What Is Franchising?
Franchising is a business model where a company (the franchisor) allows an individual or business (the franchisee) to operate under its brand name and sell its products or services. In return, the franchisee pays a fee and ongoing royalties.
2. How Does Franchising Work?
Here’s how it typically works:
- The franchisor owns the brand, systems, and business model.
- The franchisee buys the rights to operate a branch of the franchisor’s business.
- The franchisee follows established guidelines and pays fees, often including:
- An initial franchise fee
- Ongoing royalties or profit shares
- Marketing contributions
The franchisee gets support in training, marketing, and operations while benefiting from an established brand.
3. Types of Franchising
- Product Distribution Franchising: The franchisee sells the franchisor’s products (e.g., car dealerships).
- Business Format Franchising: The franchisee replicates the franchisor’s entire business model (e.g., fast food chains like McDonald’s).
- Management Franchising: The franchisee runs a business by managing others, often in services like cleaning or recruitment.
4. Pros of Franchising
- Proven business model with lower risk
- Brand recognition from day one
- Training and ongoing support from the franchisor
- Easier access to funding (banks prefer proven models)
- Shared national marketing and reputation
5. Cons of Franchising
- High startup costs and ongoing fees
- Less control over operations and decisions
- Must follow franchisor’s rules and systems
- Risk of brand damage from other franchisees
- Restrictions on selling or exiting the business
6. Who Should Consider Franchising?
Franchising suits individuals who:
- Want to run a business but prefer a structured approach
- Lack experience but are willing to follow guidelines
- Value brand power and operational support
- Are comfortable with rules and less autonomy
7. Common Franchise Examples in the UK
- Food & Drink: Subway, Costa Coffee
- Fitness: Anytime Fitness, F45
- Retail: CeX, Card Factory
- Cleaning & Care: Molly Maid, Home Instead
Franchise opportunities exist across nearly every sector.
Frequently Asked Questions
Q1: What is the initial investment for a franchise?
It varies widely—from under £10,000 for home-based franchises to over £500,000 for major retail or hospitality brands.
Q2: Are franchisees self-employed?
Yes. Franchisees run their own businesses, even though they operate under a brand’s system.
Q3: Do I need business experience to buy a franchise?
Not always. Many franchisors provide full training and support.
Q4: Can I sell my franchise?
Yes, but you typically need the franchisor’s approval to transfer ownership.
Q5: What is a franchise agreement?
It’s a legal contract outlining your rights, responsibilities, and obligations as a franchisee.
Q6: Is franchising regulated in the UK?
There’s no official government regulation, but the British Franchise Association (BFA) sets voluntary standards.
Conclusion
Franchising is a powerful way to start a business using a proven model. With brand strength, training, and support, it reduces risk—but it also limits control and requires financial commitment. For many UK entrepreneurs, it’s a smart path to owning a business with built-in advantages.