For many small businesses franchising is a viable option to expand their firm and a proven method to get involved in an already established business.

Business format franchising

Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee). This entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.

The fundamental elements of a business format franchise are: piloting to prove the idea works and can be replicated, initial training to franchisees in the operation of the business, the ownership of the business by the franchisee and the capital investment they will have to make.

The provision of ongoing support is also a vital element. Whilst the franchisee is the owner of the business, it is important to remember that it is the franchisor's system and brand that the franchisee is operating under.

Why franchising?

The motivations for investing in a franchise are many and varied. From the desire to escape the 9 to 5 routine, be your own boss, improve career prospects and lifestyle, as well as spend more time with family and have a more flexible routine, franchising is seen as a very realistic option for many people who want to start their own business.

There are clear advantages to franchising:

* You do not have to come up with an idea - someone else has had it - and tested it too!
* Larger, well established franchise operations will often have national advertising campaigns and a solid trading name.
* Good franchisors will offer comprehensive training programmes in all business skills, including sales.
* Good franchisors can also help secure funding for your investment as well as, for example, discounted bulk-buy supplies for outlets when you are in operation.
* You will be in business for yourself but not by yourself - although you run your ‘own show' you are part of a much larger organisation and will have the backing of a franchisor support team.

Next Steps

With any life changing decision and significant investment there are important factors to consider and anyone thinking of starting a franchise should carry out thorough due diligence in advance. This should include:

bfa Membership
Whilst it is not a guarantee of a system, it does ensure that the franchisor has been independently measured against a code of ethical franchising.

Your finances
Understand right at the beginning what you can afford to invest and what borrowings you are prepared to take. Also pay attention to the returns that the business will generate for you. Do this before you fall in love with something that you cannot afford or that cannot support you or your family.

Research the market
Speak to trade associations for the operational business. Use the internet to research the business that you will be involved in. Those entering franchising are sometimes blinded by owning their own business; they need to understand what that business actually does and the market in which it operates.

Visit an exhibition
The industries operating in the franchise sector are many and varied. Going along to a franchise exhibition is an ideal way of seeing the breadth of opportunity available to prospective franchisees.

Research the franchise
Speak to current franchisees of your choice. This may be managed and not every franchisee will want to speak to you, but don't just settle for the ones you are given. Look for franchisees with a background like yours or ones at differing stages of development in different areas. Also research the franchisor. How has the business grown? Have they lost any franchisees? Evaluate the support, the value in the costs and the nature of the agreement.

There is no shortage of choice when it comes to finding an industry that suits your needs and aspiration. The biggest problem faced by those coming to franchising for the first time is knowing where to start their search and how to go about navigating their way through the maze of information out there.

For more information on the educational seminars and the bfa visit www.thebfa.org