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UK Franchises

In recent years in the UK franchising has greatly increased in popularity. In the last year alone the contribution of franchised business to the economy increased by over £5 billion to 12.4 billion. There is no doubt that franchising is now a significant part of the UK economy.

A basic definition of franchising is that it is an agreement where a company sells the rights for another person or group to sell its products or services. However in reality franchising is more complex and there are a number of different types of franchise agreement.

Although every franchise agreement will differ to some extent in general franchising can be divided into five distinct categories -

Manufacturing Franchises

In this type of agreement the franchisor allows the franchisee to manufacture its products and to sell them using its brand and trademarks. This type of arrangement is particularly common in the food and beverage industry. The franchising company receives an initial fee and depending on the agreement may also receive an additional fee for every unit of the product sold.

Business Franchise Ventures

A business franchise venture is an agreement where the franchisee purchases and distributes products for the franchising company. The franchisor typically locates and provides the client base for the franchisee to manage. An example of a business franchise venture is the vending machines that can be found in many public areas and workplaces. The franchisee buys the vending machines, maintains them and takes a share of the machines takings.

Product Franchises

In this type of franchise the franchising company uses the agreement as a method for the distribution of its products. The franchisee is given the right to use the brand name of the franchisor to sell its products. In product franchises the franchisee will pay a franchise fee or may alternatively agree to purchase a minimum amount of stock to sell on.

Business Format Franchises

This is the most complex type of franchise agreement and involves a broader relationship between the franchising company and its franchisees. In this agreement the franchisee’s investment includes the purchase of the operating processes of an existing business including its brands and products. Training and support is also likely to be provided to the franchisees. A common example of business format franchising is.

Part Time Franchises

Not everyone wants to work full time and there are numerous reasons for this, perhaps you are looking for a business to supplement your existing income or perhaps if are busy with childcare or other daily duties that restrict the hours you are available for work. If this is the case then there are literally hundreds of part time franchise opportunities out there to choose from, ranging from vending machine franchise through to internet based franchises. Most part time franchises can be taken full time and it is all about how much time you want to put into the running of them. You could for instance go from working 10 hours per week up to 50 and bring it in line with the pay you would normally expect to receive from full time employment, except of course that you are your own boss!

With many UK franchises to choose from it is best to take a look at several and research each one, for this I recommend using one of the many franchise directories out there to help you narrow down your choice.

Tags: Franchises

Information on Some Common Franchising Myths

Franchising is the best way to enter the business world. From top franchise business owners, you get the support to understand a business module and how to run it in a successful way. Even though the concept of franchising is popular, yet there are certain erroneous beliefs about this business concept which at times mislead investors and entrepreneurs for investing in any top franchise business.  Here are certain myths related to franchise opportunities and the actual fact behind it.

Myth – Anyone can enjoy success in a franchise business

Actual fact – Investing in a franchise business is a good option to enjoy success in business. But, remember success is never guaranteed. For the success of any business there are many factors responsible for it like market saturation, training, support, location, the economy, and how hard you are working to make your business successful.

Myth – Franchising is best way to earn money

Actual fact – To make a franchise business profitable, both time and dedication is required. Thus, if you think that just investing money in a franchise business will make you richer, then you are having a wrong approach. You need to treat a franchise business as your own and put in hours of hard work in order to make it successful.

Myth – Investing in top franchise concept means success

Actual fact – Going for an established and easily recognizable top franchise options has got many benefits. But this never means that you will enjoy success. A lot depends on the kind of training and on-going support you will receive from the franchisor. Only when you will able to offer quality services to your customers, success will come in your way.

Myth – High cost franchise means higher return

Actual fact – Higher investment in franchise business does not guarantee higher returns. It has been found that high-cost franchise opportunities at time may get you less money as compared to a low cost franchise business. 

Myth – Franchising business is less expensive

Actual fact – The startup costs for starting a franchise and starting your own business from scratch are often the same. Remember in a franchise business you need to invest money in an appropriate location plus you need to pay franchise fees and royalties to the franchisor for using their trademark and business model.

Myth – In franchising you will be your own boss

Actual fact – Certain amount of freedom and flexibility is there in a franchise business but remember you will always need to work within the company system and follow the pre-set standards for wages, suppliers, the price of the products, norms related to working hours and so on.

Myth – I don’t need any help from a lawyer to start a franchise business

Actual fact – For starting a franchise business, a legal contract is signed between the franchisor and a franchisee. To ensure you understand all legal and financial liabilities it is advisable to take help from a lawyer before you sign any papers. This will ensure smooth functioning of your franchise business.

Well, there are some more franchising myths, but never forget that the benefits of franchising are immense. These benefits cannot be ignored and if you really wish to get the best values of your money start looking for top franchise opportunities in the market.

Tags: Common, Franchising, Information, Myths, Some

Franchising: The Basics for Beginners

Buying a franchise can be an excellent way to go into business while having the security of a tried and true business plan for success. It can take much of the trial and error out of the equation that independent business owners often go through, because you can instead work from a template of an already proven business model and focus your time on perfecting your operation. When deciding whether a franchise business is right for you, it’s important to know the basics such as how they function and what you can expect from your franchisor-franchisee relationship before you jump in any further. Here is some basic franchise business information to help you get started:

What is a Franchise? A franchise is defined as an agreement between the franchisor and franchisee, wherein the individual buying into a franchise will market a product or service created and provided by the franchisor. It is a form of business ownership where you are halfway functioning as your own boss, as a business owner, but also working within an established organization and system.  Franchising offers business owners the ability to work for themselves, but with the security of an existing framework and support to help them achieve success. However, franchising is not a magic formula, and franchisees will still have to have strong entrepreneurial skills and the dedication to ensure the business functions to the best of its ability.

The Financial Exchange:  For the privilege of working within the franchisor’s system, the franchisee must pay certain royalties and fees back to the parent company, and there can be a lot of variation from one organization to the next, so it’s best to do research in order to get the franchise business agreement that will work for you. At this stage in the process it is extremely important to have an experienced franchise lawyer to help you negotiate contracts.  In return for this financial exchange, the franchisor can provide support, marketing, and the initial framework to get the new franchise owner’s business started – again there can be variations in the level of support you will receive from one franchise business to the next, so some research and franchise evaluation will be required.  A franchise lawyer would be able to assist you in creating a comprehensive franchise evaluation report.

The Two Main Types of Franchise: When looking to buy a franchise, you will find that there are two main types to choose from, business franchise, and product/trade name distribution franchise.  For business format franchises, the franchisee receives the whole setup to start their own business, including trademarks, logos, marketing, a clearly defined business plan, as well as ongoing support from their chosen franchisor, in exchange for an upfront franchise fee and ongoing royalties. Examples of this include fast food restaurants, gyms, cleaning agencies, and copy centers, which all must be run according to the predetermined structure established by the franchisor, and maintain a set of standards laid out for them in their franchise contract. For product/trade name franchising, it is a much simpler affair, with franchisors providing a product, advertising, and branding, so that the franchisee can sell their wares in their chosen location—examples of this form of franchising include soft drinks and office supplies.

Tags: Basics, Beginner's, Franchising

Franchise Disclosure Documents (FDD) – Review Costs; How Much Should You Pay?

Trading Your Briefcase For An Ice Cream Scoop

You’re excited about buying a franchise, taking the plunge, ready to trade your briefcase for an ice cream scoop. The company’s told you it’s the opportunity of a lifetime, given an impressive tour of their headquarters and taken you to a couple of their operating outlets. When the day ended, they presented their FDD or Franchise Disclosure Document. The representative told you to read it and the contract couldn’t be signed for at least 14 days. Who do you use and what’s it going to cost to review your FDD?

Using A Lawyer Or An Accountant?
Glancing through the document, the first thing you notice is it’s very dry and technical – just the thing to read if you’re having trouble getting to sleep at night. You notice something in bold print on the cover page about showing it to a lawyer or an accountant. Certainly there’s a big difference between a lawyer and an accountant you note. Why would the government say you could use either one? Since the investment in this franchise is a bit north of 0,000 you wisely decide an attorney makes a lot more sense than an accountant. But lawyers and franchise attorneys are expensive and what kind should you use?

In the above hypothetical the good news is the franchise investor is on track to use an attorney to review the FDD. Franchise Disclosure Documents are complicated, often running into hundreds of pages, with many tables that only reference sections of the complex and verbose franchise contract containing boilerplate that bites. The tables reference these sections, but don’t go into any of the details about the biting process. It’s absolutely essential to use not only an attorney, but a “franchise attorney” to review these FDD’s. The bad news is many franchise investors shy away from paying for independent advice. I consulted with a couple after-the-fact who invested over million in a horrible franchise. Before investing all of their worth in this franchise, they failed to invest even one dollar in a legal or business review-analysis.

Why Use A Franchise Attorney?
Based on my review of over 500 FDD’s, I’ve learned a lot. Perhaps the most important lesson is when it comes to franchise agreements, you don’t get what you deserve or even what’s fair – you get what you negotiate. I’ve noticed a disturbing trend that franchise companies, especially new ones, are including very unfair provisions in their franchise contracts. As long as the applicable contract sections are disclosed in the relevant tables contained in the FDD, they’ve fulfilled their legal disclosure obligations. But, if you don’t see these flashing red lights and sign up, you’ll be up the proverbial creek without a paddle.

That’s a franchise attorney’s function – to see the flashing red lights that you don’t even notice. Don’t forget, a franchise is a long term legal and financial commitment – usually 10 to 20 years minimum. There’s the franchise contract and the commercial real estate lease, the initial investment of hundreds of thousands of dollars AND the cash reserves needed to hopefully reach the break even point – which can be years down the road in many cases. It’s suicidal to spend what often amounts to a significant amount of one’s net worth, and taping into the rest over a 10 to 20 year period without seeing what you’re jumping into. Look before you leap into a big, dark hole.

Cost To Use A Franchise Attorney
So what does it cost to have a franchise attorney review an FDD? A ,000 to ,000 up front retainer (meaning pay this now, plus more later on) applied against hourly rates of 0 to 0 per hour is par for the course these days. That’s not unreasonable, given the magnitude of just the initial franchise investment and the 10 to 20 year legal and financial commitments that will end up being a large multiple of the initial investment amount. But is there is any other competent, franchise attorney review options?

FDD Evaluator
Over the past 29 years, I’ve reviewed a lot of FDD’s (formerly called UFOC’s). I also owned and operated a franchise myself, so I know how to detect the good, the bad and the ugly in franchising. Franchise Foundations has developed a unique review program called FDD Evaluator (sm). A flat fee of 0 covers a review of the FDD and gives a thumbs up or down on the franchise. The review also includes disclosing any red flags or unfair contractual provisions discovered. Assuming you decide to move forward at that point, you can either negotiate the unfair provisions yourself – which many clients do successfully – or you can retain someone for that specific task.

Negotiation of Franchise Contracts
Contrary to what many franchise companies say, there is a lot of negotiation possible, especially with unfair contract provisions and even more so with new or small-to-medium size franchise companies. Now, if you’re dealing with a McDonalds or other blue chip franchise company, forget about franchise negotiations. But you can also forget about unfair contract provisions – they’re well beyond that. Remember to safeguard your franchise investment by using a competent franchise attorney.

Copyright 2008-2009, Kevin B. Murphy

For more information about FDD Evaluator click here

To contact a Franchise Attorney click here

Tags: costs, Disclosure, Documents, Franchise, Much, Review, Should

Where do You Get Your Franchise Information?

The world is an information highway now with a multitude of different avenues for receiving it. When looking to buy a franchise or interested in franchising your business you have 3 main options of where to gain your franchise information from. Please find below descriptions of franchise websites, franchise magazines and franchise exhibitions!

1. Franchise websites

There are many hundreds, if not thousands of franchise information websites out there. Ranging from franchise directories through to franchise review sites and to authoritative industry leaders. All these sites have their own purpose and value and whatever information you need, believe me you will find it on the web. Sites such and the IFA and the BFA will give you authoritative articles and information on the franchise industry however depending on what information you are looking for these are all bias to ensure only good reviews of franchises are published. There are many independent sites also which offer unbiased reviews and publications which although are not authoritative sites are still very good franchise information resources.

2. Magazine Publications

Franchising is a niche industry and with it comes some great niche magazine publications. Although the readership is not huge you will find that they contain a wealth of franchise information on the country’s franchise industry. From top ten franchises through to exhibition dates through to individual franchise reviews. They are a great way of learning more about the industry and keeping you up to date with the latest franchise news. If you prefer your reading off line then they can be flicked through in the comfort of your own home and are a great way of getting your franchise information. To learn more about what are the best franchise publications though your best bet is to search the internet, do a few google searches for “franchise Magazines” and you should come up with the industry leaders and even be able to order them online.

3. Franchise Exhibitions

Although a niche industry, it is also a very large and profitable one. throughout the entire year you will be able to find franchise exhibitions being held up and down the country. Many of these attract thousands of people and have stand after stand of franchise opportunities selling their wares, as well as stand offering franchise financing, franchise information and everything else you can imagine. These events are great and offer a real hands on approach to gaining your franchise information. even if you cannot attend many you should at least try and attend one!

However you gain your franchise information you are certainly not going to be short of avenues, there are literally thousands of franchise websites, franchise exhibitions and franchise magazines all devoted to this highly profitable industry, my personal preference? Google is my friend! Do a few Google searches for franchise and you will be sure to come up with the most authoritative sites on the internet, full of franchise information. Google is also your best way of finding out what magazine publications are available and even what franchise exhibitions dates and locations are.

Tags: Franchise, Information