A franchise is an arrangement between a well-known company (the franchiser) and a local operator (the franchisee). The franchisee is self-employed and owns and runs the business, but gets the benefit of running an established business whose products or services are already familiar to the public.

There are different types of franchise agreement, but usually the franchiser pays an initial fee to use the franchising company’s brand, systems and products, and also a regular management service fee based on a percentage of turnover. In return, the franchising company offers training and guidelines for running the business, advertising, and design, fittings and layout of business premises.

Many types of business are run as franchises, for example:

• convenience stores
• food take-aways
• printing
• professional cleaning services
• hairdressers
• parcel delivery
• estate agents
• recruitment consultancies.

Although franchising companies usually provide a lot of information and support, franchisees need to understand the basics of how to run a business from a financial and operational point of view.

Hours and Environment

Most franchises involve long working hours. Actual hours worked varies according to the type of business and may involve evening and weekend work.

The work environment also varies according to the type of franchise.

Skills and Interests

To be a self employed franchisee you should:

• be independent, energetic and self-motivated
• be able to run your own business
• be highly organised
• be able to follow the franchise company's rules and guidelines
• have good numeracy skills to be able to understand budgets and accounts 
• have the confidence and skills to market and promote your own business 
• have good communication skills
• be able to manage and motivate employees.

Entry

You do not need any formal qualifications to run most franchises, but you will need general business skills such as people management and an understanding of marketing and basic accounts.

You do not usually need any direct experience of the business that you are running, but you will find it useful to have previous sales and management experience.

You will need enough capital to pay the franchiser’s fees and to build up the business locally in its early stages. Few franchises are available for less than £5,000. The average initial start-up cost is between £20,000 and £50,000.

The British Franchise Association runs seminars and provides information to people who are thinking of running a franchise. They also assess and accredit franchising companies. See Further Information for contact details.

Many local colleges run business start-up courses, which you may find useful. The Business Link network offers a range of business support and development services, including training and advice. Similar services are available in Scotland from Scottish Enterprise, and in Wales from Business Eye Wales. 

Training

All franchising companies will offer you some kind of initial training. Training may be at your own premises, or at a training centre elsewhere. Some franchisers will also train your employees and provide ongoing training as part of the franchise agreement.

Training is likely to include:

• operating the business to the required standard
• sales skills
• product knowledge, pricing and marketing
• finance, administration and customer relations.

You could choose to work towards NVQs/SVQs aimed at people running their own business, such as:

• Level 3 in Business Start-up
• Level 4 in Business Development.

Other useful NVQs/SVQs could include Accounting at levels 2 to 4; Management at levels 3 to 5; and Customer Service at levels 2 and 3.

Opportunities

There are currently over 700 franchise systems running in the UK, including many well-known businesses.

Home-based franchises are usually the simplest and cheapest to set up, although most franchises need business premises and more financial backing.

Annual Income

Figures are intended as a guideline only.

Average earnings range from around £15,000 to £30,000 a year. It may be possible to earn more.

Income depends on the nature and size of franchise, the product or service, and how much effort the franchisee puts into making the business work.

Further information

Tel: 0845 607 8787
Franchise House
56 Surrey Street
Norwich
NR1 3FD
Tel: 01603 620301
Tel: 0845 600 9006
Thames View
Newtown Road
Henley-on-Thames
Oxfordshire
RG9 1HG
Tel: 01491 578050
Tel: 08457 969798