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Jan 3, 2024
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8
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Jan 3, 2024
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8
min read
Want to try Pebble?
Are you considering expanding your business through franchising in the UK? It's really common that providers in this sector look at it as a way to grow and it’s a significant step that offers potential for growth and profitability, but it also requires careful planning and consideration.
Franchising can be a mutually beneficial arrangement for both the franchisor (the business owner) and franchisees (those who buy into the business), but it's essential to understand the complexities involved. Here are some key considerations to keep in mind when franchising your business in the UK based on 30 years in this sector, 22 of it in franchising and the last 13 years helping businesses in this sector grow and in the process working with nearly one hundred franchisors at various stages of their business on a variety of different types of projects:
Is it the right thing in the first place?
This is probably the most important stage, because you want to make sure it’s the right decision. You can pay someone up to £5k to do a feasibility study but we consider that these are just over-priced templates to encourage you to franchise.
The things to consider here, are the profitability of the existing business, is it a really solid foundation to build on.
You’ve got to consider the fact that this is a second business, not just a bolt on, so it’s going to take time and resources of you and your existing team or new people to help.
More nuanced might be the fact that in franchising you need to be able to manage people who you don’t employ but you need to run their business pretty much how you advise.
You also need to understand that it’s not a get-rich quick scheme and generally people don’t build massive international franchisors in a short space of time. It’s generally at 10 year plus business model.
Competition is a big one too, if there’s multiple other franchisors in your space with more resources, a massive advantage over you in terms of time in the market and you don’t have enough USP’s over there for it to make a difference, you have to consider how you’re going to compete with them.
Don’t franchise if your current business is struggling as franchising is not a fix for a broken business as firstly ethically and morally it’s wrong to sell it to someone else, also your resources need to be put into fixing these challenges rather than selling it to someone else.
Consider other methods of scaling, distributing or growing your business as franchising/licencing isn’t the only one and we can speak to you about other ways that have been incredibly successful for our clients. Be wary of an advisor that hasn’t considered other methods because they might only be able to help with franchising, because, as they say, ‘if you only have a hammer, then everything becomes a nail!’
If/when you’ve been through those or got good advice on them, these are some of the main things you need to consider if you’re going to franchise.
Legal and Regulatory Compliance
Before franchising your business, ensure that you understand the legal requirements and regulations governing franchising in the UK. Familiarize yourself with the British Franchise Association (BFA) standards and regulations, as adhering to these guidelines can enhance the credibility of your franchise system. You don’t have to join straight away but you need to understand what you need to do.
Solid Business Model
A successful franchise is built on a solid and proven business model, which we tend to call the prototype. Ensure that your business has a track record of profitability and that its processes and systems are replicable. Franchisees will be investing in your brand, so they'll expect a robust framework for success. There needs to be enough profitability in this prototype that a franchisee can pay the franchisor a cut of the revenue and still make a good profit.
Franchisee Selection
Choosing the right franchisees is crucial for the success of your franchise network. Look for individuals who are aligned with your brand values, possess the necessary skills and experience, and are committed to following your business model. Conduct thorough due diligence and screening processes to ensure compatibility. This is the really hard stage and it's prudent to start with finding pilots who can help you confirm that franchising is the right thing and also learn how to be a franchisor before you spend a lot of money marketing it around the UK/World.
Franchise Agreement
The franchise agreement is a legally binding contract that outlines the rights and responsibilities of both the franchisor and the franchisee. Seek professional legal advice and we can point you to who we feel are the best franchise solicitors in the UK to draft a comprehensive agreement that covers all aspects of the franchise relationship, including fees, territory rights, training and support, intellectual property rights, and termination clauses.
Training and Support
Providing comprehensive training and ongoing support to your franchisees is essential for maintaining brand consistency and ensuring the success of the franchise network. Develop training programs that cover all aspects of running the business that you’re asking them to do like operations and marketing to customer service and management. Again it’s prudent to try and make these more efficient over time.
Marketing and Branding
As the franchisor, you'll typically be responsible for marketing and promoting the brand at the national/international level, while franchisees will handle local marketing efforts. Nowadays with modern marketing methods you can really geo-target marketing to the area the new franchisee is in and so you might not need to market nationally on their behalf. This is one of the most important aspects of franchising, as they need to be able to get customers and to get them quickly. You also need to consider that you’ve got the budget to market the franchise offering, as this can be expensive, is getting harder and harder and can take time, so factor in the franchisors cost for marketing.
Financial Considerations
Franchising involves significant financial investment, both for the franchisor and the franchisee. Determine the initial franchise fee, ongoing royalties, and other fees that franchisees will be required to pay. Additionally, establish financial projections and budgets to ensure the financial viability of the franchise system. It’s really important to get advice on this in the piloting or early stages to make sure that you’ve got it right as if it’s not and it’s fundamentally unfair to one side then it’s going to hinder it, because franchising works best when both parties are aligned and it works for both of them. We help clients with financial modelling their prototype and pilots to show future franchisees what’s possible and this constantly evolves as the franchisees grow and push the limits of what’s possible.
Territory Planning
General advice is to define territories for each franchise location to prevent cannibalization of each other and ensure that franchisees have a viable customer base, though not all do this. Conduct market research to identify potential territories and determine the optimal number of units for each area. There are mapping companies that can help with this before or after piloting and we generally advise retro-mapping rather than pre-mapping an entire country to start with for a number of reasons but either can work.
Continuous Improvement
The franchising landscape is constantly evolving, so it's essential to stay agile and adapt to changing market trends and consumer preferences. Solicit feedback from franchisees and customers, and continuously evaluate and refine your business model to drive growth and innovation as those that are old enough can remember Blockbuster and it’s failure to adapt to a changing market-place.
Exit Strategy
While it's important to focus on the long-term success of your franchise network, it's also wise to have an exit strategy in place. Whether you plan to sell the entire franchise system or individual units in the future, having a clear exit plan will help you maximize value and ensure a smooth transitio
Find really good advice on all of the above
If you want to chat then get in touch as we help businesses with scaling and growing a business, whether that’s franchising or not and can give you an honest opinion on whether it’s franchisable or if there’s a better way to grow.
There’s loads more detail we could go into as there are so many details to get right if you’re to franchise successfully, but in conclusion, franchising can be a great growth strategy for businesses in the UK, as it’s low-cost and low-risk compared to others, but it requires good levels of funding, careful planning, execution, and ongoing management. By considering these key factors and working closely with experienced professionals, you can build a successful franchise network that delivers value to both franchisor and franchisees alike.
About the author
Mark Rasche is adirector of Sport & Activity Professionals and for the last 13 years has consulted, trained, coached and mentored clients in the kids activities, sport, health, leisure, recreation and franchise sectors. He’s helped clients to build their businesses, market to schools, nurseries and parents and prior to running a consultancy, he helped build a large kids activities business in sport, that marketed to schools/nurseries and parents and was franchised to 61 countries around the world.
Mark is also voluntary deputy chairman of the industry body, The Children’s Activities Association, that any provider in the sector should look into for the benefits it provides to them and the peace of mind it gives to their customers.
Mark is also accredited and endorsed by the Association of Business Mentors, the Association of Indoor Play and works with many government funded agencies in the UK to help businesses grow and improve, as well as being a subject matter expert for the Abu Dhabi Government on subjects like this.
He’s also been a mentor for programmes through Nat West, Santander, UnLtd, Odgers Connect Consultancy Services, Grant Thornton and other organisations and through all of this has helped hundreds of businesses grow, improve and overcome the challenges, barriers and issues they face.
If you’re an ambitious business looking to grow in some way or have challenges you’d like to overcome or both please feel free to get in touch to have a chat to see if we can help you achieve these goals.
We also run regular training workshops for providers in this space to grow their business as part of the ‘Train for Success’ series we’re running, which is like a mini MBA for businesses in this sector. Click here for more information or get in touch to arrange a bespoke workshop for your staff/franchisees.
Are you considering expanding your business through franchising in the UK? It's really common that providers in this sector look at it as a way to grow and it’s a significant step that offers potential for growth and profitability, but it also requires careful planning and consideration.
Franchising can be a mutually beneficial arrangement for both the franchisor (the business owner) and franchisees (those who buy into the business), but it's essential to understand the complexities involved. Here are some key considerations to keep in mind when franchising your business in the UK based on 30 years in this sector, 22 of it in franchising and the last 13 years helping businesses in this sector grow and in the process working with nearly one hundred franchisors at various stages of their business on a variety of different types of projects:
Is it the right thing in the first place?
This is probably the most important stage, because you want to make sure it’s the right decision. You can pay someone up to £5k to do a feasibility study but we consider that these are just over-priced templates to encourage you to franchise.
The things to consider here, are the profitability of the existing business, is it a really solid foundation to build on.
You’ve got to consider the fact that this is a second business, not just a bolt on, so it’s going to take time and resources of you and your existing team or new people to help.
More nuanced might be the fact that in franchising you need to be able to manage people who you don’t employ but you need to run their business pretty much how you advise.
You also need to understand that it’s not a get-rich quick scheme and generally people don’t build massive international franchisors in a short space of time. It’s generally at 10 year plus business model.
Competition is a big one too, if there’s multiple other franchisors in your space with more resources, a massive advantage over you in terms of time in the market and you don’t have enough USP’s over there for it to make a difference, you have to consider how you’re going to compete with them.
Don’t franchise if your current business is struggling as franchising is not a fix for a broken business as firstly ethically and morally it’s wrong to sell it to someone else, also your resources need to be put into fixing these challenges rather than selling it to someone else.
Consider other methods of scaling, distributing or growing your business as franchising/licencing isn’t the only one and we can speak to you about other ways that have been incredibly successful for our clients. Be wary of an advisor that hasn’t considered other methods because they might only be able to help with franchising, because, as they say, ‘if you only have a hammer, then everything becomes a nail!’
If/when you’ve been through those or got good advice on them, these are some of the main things you need to consider if you’re going to franchise.
Legal and Regulatory Compliance
Before franchising your business, ensure that you understand the legal requirements and regulations governing franchising in the UK. Familiarize yourself with the British Franchise Association (BFA) standards and regulations, as adhering to these guidelines can enhance the credibility of your franchise system. You don’t have to join straight away but you need to understand what you need to do.
Solid Business Model
A successful franchise is built on a solid and proven business model, which we tend to call the prototype. Ensure that your business has a track record of profitability and that its processes and systems are replicable. Franchisees will be investing in your brand, so they'll expect a robust framework for success. There needs to be enough profitability in this prototype that a franchisee can pay the franchisor a cut of the revenue and still make a good profit.
Franchisee Selection
Choosing the right franchisees is crucial for the success of your franchise network. Look for individuals who are aligned with your brand values, possess the necessary skills and experience, and are committed to following your business model. Conduct thorough due diligence and screening processes to ensure compatibility. This is the really hard stage and it's prudent to start with finding pilots who can help you confirm that franchising is the right thing and also learn how to be a franchisor before you spend a lot of money marketing it around the UK/World.
Franchise Agreement
The franchise agreement is a legally binding contract that outlines the rights and responsibilities of both the franchisor and the franchisee. Seek professional legal advice and we can point you to who we feel are the best franchise solicitors in the UK to draft a comprehensive agreement that covers all aspects of the franchise relationship, including fees, territory rights, training and support, intellectual property rights, and termination clauses.
Training and Support
Providing comprehensive training and ongoing support to your franchisees is essential for maintaining brand consistency and ensuring the success of the franchise network. Develop training programs that cover all aspects of running the business that you’re asking them to do like operations and marketing to customer service and management. Again it’s prudent to try and make these more efficient over time.
Marketing and Branding
As the franchisor, you'll typically be responsible for marketing and promoting the brand at the national/international level, while franchisees will handle local marketing efforts. Nowadays with modern marketing methods you can really geo-target marketing to the area the new franchisee is in and so you might not need to market nationally on their behalf. This is one of the most important aspects of franchising, as they need to be able to get customers and to get them quickly. You also need to consider that you’ve got the budget to market the franchise offering, as this can be expensive, is getting harder and harder and can take time, so factor in the franchisors cost for marketing.
Financial Considerations
Franchising involves significant financial investment, both for the franchisor and the franchisee. Determine the initial franchise fee, ongoing royalties, and other fees that franchisees will be required to pay. Additionally, establish financial projections and budgets to ensure the financial viability of the franchise system. It’s really important to get advice on this in the piloting or early stages to make sure that you’ve got it right as if it’s not and it’s fundamentally unfair to one side then it’s going to hinder it, because franchising works best when both parties are aligned and it works for both of them. We help clients with financial modelling their prototype and pilots to show future franchisees what’s possible and this constantly evolves as the franchisees grow and push the limits of what’s possible.
Territory Planning
General advice is to define territories for each franchise location to prevent cannibalization of each other and ensure that franchisees have a viable customer base, though not all do this. Conduct market research to identify potential territories and determine the optimal number of units for each area. There are mapping companies that can help with this before or after piloting and we generally advise retro-mapping rather than pre-mapping an entire country to start with for a number of reasons but either can work.
Continuous Improvement
The franchising landscape is constantly evolving, so it's essential to stay agile and adapt to changing market trends and consumer preferences. Solicit feedback from franchisees and customers, and continuously evaluate and refine your business model to drive growth and innovation as those that are old enough can remember Blockbuster and it’s failure to adapt to a changing market-place.
Exit Strategy
While it's important to focus on the long-term success of your franchise network, it's also wise to have an exit strategy in place. Whether you plan to sell the entire franchise system or individual units in the future, having a clear exit plan will help you maximize value and ensure a smooth transitio
Find really good advice on all of the above
If you want to chat then get in touch as we help businesses with scaling and growing a business, whether that’s franchising or not and can give you an honest opinion on whether it’s franchisable or if there’s a better way to grow.
There’s loads more detail we could go into as there are so many details to get right if you’re to franchise successfully, but in conclusion, franchising can be a great growth strategy for businesses in the UK, as it’s low-cost and low-risk compared to others, but it requires good levels of funding, careful planning, execution, and ongoing management. By considering these key factors and working closely with experienced professionals, you can build a successful franchise network that delivers value to both franchisor and franchisees alike.
About the author
Mark Rasche is adirector of Sport & Activity Professionals and for the last 13 years has consulted, trained, coached and mentored clients in the kids activities, sport, health, leisure, recreation and franchise sectors. He’s helped clients to build their businesses, market to schools, nurseries and parents and prior to running a consultancy, he helped build a large kids activities business in sport, that marketed to schools/nurseries and parents and was franchised to 61 countries around the world.
Mark is also voluntary deputy chairman of the industry body, The Children’s Activities Association, that any provider in the sector should look into for the benefits it provides to them and the peace of mind it gives to their customers.
Mark is also accredited and endorsed by the Association of Business Mentors, the Association of Indoor Play and works with many government funded agencies in the UK to help businesses grow and improve, as well as being a subject matter expert for the Abu Dhabi Government on subjects like this.
He’s also been a mentor for programmes through Nat West, Santander, UnLtd, Odgers Connect Consultancy Services, Grant Thornton and other organisations and through all of this has helped hundreds of businesses grow, improve and overcome the challenges, barriers and issues they face.
If you’re an ambitious business looking to grow in some way or have challenges you’d like to overcome or both please feel free to get in touch to have a chat to see if we can help you achieve these goals.
We also run regular training workshops for providers in this space to grow their business as part of the ‘Train for Success’ series we’re running, which is like a mini MBA for businesses in this sector. Click here for more information or get in touch to arrange a bespoke workshop for your staff/franchisees.
Are you considering expanding your business through franchising in the UK? It's really common that providers in this sector look at it as a way to grow and it’s a significant step that offers potential for growth and profitability, but it also requires careful planning and consideration.
Franchising can be a mutually beneficial arrangement for both the franchisor (the business owner) and franchisees (those who buy into the business), but it's essential to understand the complexities involved. Here are some key considerations to keep in mind when franchising your business in the UK based on 30 years in this sector, 22 of it in franchising and the last 13 years helping businesses in this sector grow and in the process working with nearly one hundred franchisors at various stages of their business on a variety of different types of projects:
Is it the right thing in the first place?
This is probably the most important stage, because you want to make sure it’s the right decision. You can pay someone up to £5k to do a feasibility study but we consider that these are just over-priced templates to encourage you to franchise.
The things to consider here, are the profitability of the existing business, is it a really solid foundation to build on.
You’ve got to consider the fact that this is a second business, not just a bolt on, so it’s going to take time and resources of you and your existing team or new people to help.
More nuanced might be the fact that in franchising you need to be able to manage people who you don’t employ but you need to run their business pretty much how you advise.
You also need to understand that it’s not a get-rich quick scheme and generally people don’t build massive international franchisors in a short space of time. It’s generally at 10 year plus business model.
Competition is a big one too, if there’s multiple other franchisors in your space with more resources, a massive advantage over you in terms of time in the market and you don’t have enough USP’s over there for it to make a difference, you have to consider how you’re going to compete with them.
Don’t franchise if your current business is struggling as franchising is not a fix for a broken business as firstly ethically and morally it’s wrong to sell it to someone else, also your resources need to be put into fixing these challenges rather than selling it to someone else.
Consider other methods of scaling, distributing or growing your business as franchising/licencing isn’t the only one and we can speak to you about other ways that have been incredibly successful for our clients. Be wary of an advisor that hasn’t considered other methods because they might only be able to help with franchising, because, as they say, ‘if you only have a hammer, then everything becomes a nail!’
If/when you’ve been through those or got good advice on them, these are some of the main things you need to consider if you’re going to franchise.
Legal and Regulatory Compliance
Before franchising your business, ensure that you understand the legal requirements and regulations governing franchising in the UK. Familiarize yourself with the British Franchise Association (BFA) standards and regulations, as adhering to these guidelines can enhance the credibility of your franchise system. You don’t have to join straight away but you need to understand what you need to do.
Solid Business Model
A successful franchise is built on a solid and proven business model, which we tend to call the prototype. Ensure that your business has a track record of profitability and that its processes and systems are replicable. Franchisees will be investing in your brand, so they'll expect a robust framework for success. There needs to be enough profitability in this prototype that a franchisee can pay the franchisor a cut of the revenue and still make a good profit.
Franchisee Selection
Choosing the right franchisees is crucial for the success of your franchise network. Look for individuals who are aligned with your brand values, possess the necessary skills and experience, and are committed to following your business model. Conduct thorough due diligence and screening processes to ensure compatibility. This is the really hard stage and it's prudent to start with finding pilots who can help you confirm that franchising is the right thing and also learn how to be a franchisor before you spend a lot of money marketing it around the UK/World.
Franchise Agreement
The franchise agreement is a legally binding contract that outlines the rights and responsibilities of both the franchisor and the franchisee. Seek professional legal advice and we can point you to who we feel are the best franchise solicitors in the UK to draft a comprehensive agreement that covers all aspects of the franchise relationship, including fees, territory rights, training and support, intellectual property rights, and termination clauses.
Training and Support
Providing comprehensive training and ongoing support to your franchisees is essential for maintaining brand consistency and ensuring the success of the franchise network. Develop training programs that cover all aspects of running the business that you’re asking them to do like operations and marketing to customer service and management. Again it’s prudent to try and make these more efficient over time.
Marketing and Branding
As the franchisor, you'll typically be responsible for marketing and promoting the brand at the national/international level, while franchisees will handle local marketing efforts. Nowadays with modern marketing methods you can really geo-target marketing to the area the new franchisee is in and so you might not need to market nationally on their behalf. This is one of the most important aspects of franchising, as they need to be able to get customers and to get them quickly. You also need to consider that you’ve got the budget to market the franchise offering, as this can be expensive, is getting harder and harder and can take time, so factor in the franchisors cost for marketing.
Financial Considerations
Franchising involves significant financial investment, both for the franchisor and the franchisee. Determine the initial franchise fee, ongoing royalties, and other fees that franchisees will be required to pay. Additionally, establish financial projections and budgets to ensure the financial viability of the franchise system. It’s really important to get advice on this in the piloting or early stages to make sure that you’ve got it right as if it’s not and it’s fundamentally unfair to one side then it’s going to hinder it, because franchising works best when both parties are aligned and it works for both of them. We help clients with financial modelling their prototype and pilots to show future franchisees what’s possible and this constantly evolves as the franchisees grow and push the limits of what’s possible.
Territory Planning
General advice is to define territories for each franchise location to prevent cannibalization of each other and ensure that franchisees have a viable customer base, though not all do this. Conduct market research to identify potential territories and determine the optimal number of units for each area. There are mapping companies that can help with this before or after piloting and we generally advise retro-mapping rather than pre-mapping an entire country to start with for a number of reasons but either can work.
Continuous Improvement
The franchising landscape is constantly evolving, so it's essential to stay agile and adapt to changing market trends and consumer preferences. Solicit feedback from franchisees and customers, and continuously evaluate and refine your business model to drive growth and innovation as those that are old enough can remember Blockbuster and it’s failure to adapt to a changing market-place.
Exit Strategy
While it's important to focus on the long-term success of your franchise network, it's also wise to have an exit strategy in place. Whether you plan to sell the entire franchise system or individual units in the future, having a clear exit plan will help you maximize value and ensure a smooth transitio
Find really good advice on all of the above
If you want to chat then get in touch as we help businesses with scaling and growing a business, whether that’s franchising or not and can give you an honest opinion on whether it’s franchisable or if there’s a better way to grow.
There’s loads more detail we could go into as there are so many details to get right if you’re to franchise successfully, but in conclusion, franchising can be a great growth strategy for businesses in the UK, as it’s low-cost and low-risk compared to others, but it requires good levels of funding, careful planning, execution, and ongoing management. By considering these key factors and working closely with experienced professionals, you can build a successful franchise network that delivers value to both franchisor and franchisees alike.
About the author
Mark Rasche is adirector of Sport & Activity Professionals and for the last 13 years has consulted, trained, coached and mentored clients in the kids activities, sport, health, leisure, recreation and franchise sectors. He’s helped clients to build their businesses, market to schools, nurseries and parents and prior to running a consultancy, he helped build a large kids activities business in sport, that marketed to schools/nurseries and parents and was franchised to 61 countries around the world.
Mark is also voluntary deputy chairman of the industry body, The Children’s Activities Association, that any provider in the sector should look into for the benefits it provides to them and the peace of mind it gives to their customers.
Mark is also accredited and endorsed by the Association of Business Mentors, the Association of Indoor Play and works with many government funded agencies in the UK to help businesses grow and improve, as well as being a subject matter expert for the Abu Dhabi Government on subjects like this.
He’s also been a mentor for programmes through Nat West, Santander, UnLtd, Odgers Connect Consultancy Services, Grant Thornton and other organisations and through all of this has helped hundreds of businesses grow, improve and overcome the challenges, barriers and issues they face.
If you’re an ambitious business looking to grow in some way or have challenges you’d like to overcome or both please feel free to get in touch to have a chat to see if we can help you achieve these goals.
We also run regular training workshops for providers in this space to grow their business as part of the ‘Train for Success’ series we’re running, which is like a mini MBA for businesses in this sector. Click here for more information or get in touch to arrange a bespoke workshop for your staff/franchisees.
Jan 3, 2024
•
8
min read
