Over the past 10 years franchising has grown dramatically in the UK as more businesses look to develop their operations and network through franchising. There are now 781 business format franchise systems, a growth of 44% since 1996.

If it is done well, franchising is a very powerful tool for generating business development, company growth and competitiveness. But it is important to go into the process with your eyes open. There are several steps which potential franchisors should take:

 

 

  • Research the market to ensure that products and services are competitive and distinctive enough to be franchised and that customer demand is sufficiently widespread
  • Produce a business plan outlining proposals in full and including a detailed SWOT analysis
  • Protect all property rights by registering trademarks, trade names and patents with the relevant trademark and patent offices
  • Test the franchise in the form of a pilot operation lasting at least 12 months and ideally longer if the business is in any way seasonal. The pilot scheme should be undertaken at more than one location to test the concept in different geographical areas. A comprehensive pilot operation will ensure the right strategy, highlight problem areas and enable the franchisor to finalise the package before committing to developing a network
  • With the pilot operation running successfully, the franchisor can prepare and launch his or her network. At this stage, the franchisor should instruct an experienced solicitor to draw up a comprehensive franchise contract setting out the obligations of each party, including how the fees, mark-ups on supplies and any other payments from the franchisee are to be calculated. These obligations should be made clear at the outset of any agreement with a franchisee
  • Produce a prospectus to attract suitable franchisees and determine the criteria for the franchisee selection
  • Produce a comprehensive operations manual and training programme for franchisees, to set sustainable standards of customer service
  • Establish a central management function and possibly field support staff to support the franchise network. Set up a system to monitor the performance of franchisees
  • Develop a marketing, sales and advertising strategy to promote the franchise network, especially when competing with rival companies who may already be known to your potential customers
  • Seek advice from the British Franchise Association (bfa). The bfa delivers prospective franchisor workshops across the country throughout the year, designed to assist businesses in independently evaluating franchising as a tool for growing their business. Alternatively, the bfa Franchisor’s Guide (sponsored by Lloyds TSB) is invaluable in providing a wealth of unbiased step-by-step information for potential franchisors. The bfa can provide introductions to its accredited consultants, solicitors and accountants to help you meet bfa ethical franchising standards and help you identify if your business is suitable to franchise.

More information on the British Franchise Association and educational support is available at www.thebfa.org or call 01490 578 050

The National Franchise Exhibition, the UK’s largest dedicated franchise exhibition, will be offering an enormous and diverse selection of franchise opportunities at the NEC, Birmingham on 5 & 6 October 2007. The exhibition is a must attend for all budding entrepreneurs looking to start and run their own businesses. The event will offer visitors the chance to meet over 250 leading franchised companies and gain an informative insight into the benefits and rewards of running their own business as part of an established franchise brand