Should you buy a franchise?

May 16, 2013

Franchising is growing in popularity in the UK, and can be a profitable way of doing business. However, there are advantages and disadvantages and Specialist Franchise Accountants can advise on these areas

The process involves the licensing of a business ‘blueprint’ by a franchisor, to a franchisee. The franchisee buys the rights and obligations of the business, using the brand and operating the system provided by the franchisor, while the franchisor retains the overall control.

The benefits

By buying a franchise you can take on a brand which has a successful reputation and working format, thus reducing the risk of failure.

As a franchisee, you will receive initial training in running the business, as well as ongoing support, which might include advertising and promotion, administration services, and product development.

The limitations

The amount of scope to run the business your way will be limited, so you should make sure that you are happy not to have complete free reign over the business management.

You must also consider the costs involved in the venture: for example, you will need to budget for stock, premises, and management service fees.

What you need to do

When considering taking on a franchise, you must consider the structure of the business, and examine its accounts carefully, with professional help, in order to ensure that the business is both viable and financially stable.

You should also do the following:

  • Research the market for your proposed franchise
  • Calculate your projected earnings
  • Find out exactly which kinds of support are being offered by the franchisor
  • Consider any conditions that may be imposed, such as minimum sales levels.

You are strongly advised to take professional advice before entering into a franchising agreement. To find out more please click here

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