The Ultimate Guide to Home Improvement Franchises in the UK

November 21, 2018

There’s a constant growth in demand for domestic needs businesses in the UK. Can you leverage this demand with a home improvement franchise?

Through our ongoing blog series, we have tried to discuss various types of franchises and the pros and cons associated with them. There has been a recurring theme to all these blogs – the business sectors discussed were required you to have little industry experience to get started.

In this post, we are going to stray off the course – just a little bit. Home improvement franchises require you to invest a considerable sum of money with equivalent industry experience to go with it. This may sound like a bad starter, but that’s not the case. The high barrier to entry means there are more opportunities and more room to grow your business.

We will discuss the market demand for home improvement and repair franchises in the UK, the economics of how it all works and what you need to know before you invest your hard-earned money in such opportunities.

Are Home Improvement Businesses Really Needed?

The short answer is – yes, they are. Today more, than ever.

There’s no better way to justify this claim than to look within. An average homeowner in the UK has to take on major home improvements once every three years. The minor repairs, refurbishments and value-additions keep happening multiple times every year.

“Every major home improvement projects costs the homeowner an average of £23,000 (or more). This number sharply jumps to over £42,000 for improvements in recently purchased properties.”

This wasn’t always the case. The domestic housing and real estate market was the first to bear the brunt of the 2008 downturn. The strange chain of events set in motion by the recession actually ended up helping the home improvement market, as homeowners stopped investing in new real estate and started, instead, adding more value to their properties.

Of all home improvement projects in the UK, 32% are devoted to bedroom improvements, 29% to bathrooms and 28% to kitchen. Outdoors and extensions account for the rest of the pie.

It’s clear that homeowners and landlords are willing to invest in home improvements and repairs – and the reason is simple. An average home improvement job provides an ROI of 300% in the long run through property value and increased rents.

Buying and running a home improvement franchise is all about making the most of the homeowners’ willingness to invest.

Data Source: Foxtons

How Much Do You Need to Buy a UK Home Improvement Franchise?

Unlike the franchise ideas we have discussed so far, home improvement and repair franchises have more types, and hence, a wider range of options.

“While service and repair franchise will cost you around £20,000 to £40,000 in minimum initial investment, the larger, more robust construction and improvement franchises will need you to invest £60,000 to £140,000 to get started.”

This is, of course, just the capital you need to buy the franchise and the knowhow. It also usually includes training, territory rights, necessary equipment and inventory (if applicable) for the first few months. You will, however, need to take into account other expenses like office/warehouse rent, staff salaries, mobile vans for the staff, marketing budget, insurance, utilities and other operational overheads.

Recommended: Pest Control Franchises Are Booming in the UK

How Home Improvement Franchises Make Money

There are multiple revenue models used by home improvement and repair franchises in the UK. The most common model that runs across the board is the as-needed service model.

You get a call from your customer, you provide them a quote for the home improvement job they need done, you complete the project and you get paid – simple as that. The simplicity comes at a cost – more than 70% of domestic service businesses have to rely on new customers. As you know, acquiring customers always eats into the profit margins, steadily affecting the bottom line of your business.

Many home improvement franchise get around this problem by going ‘industrially domestic’. This is a new model that’s been gaining a lot of traction, especially in districts where renting a house is more affordable than owning one.

The idea here is straightforward – you work with landlords and businesses like hotels, lodges, dorms and hospitals to establish ongoing retainer contracts for improvements and repairs. This not only creates a steady stream of revenue, it opens the door for many such opportunities through business networking.

These are just the two most common ways for home improvement and repair franchises to generate revenue. Based on the specifics of business, you can certainly come up with new models that work for you.

The Importance of Territory Allocation for Home Improvement Franchises

We had a short discussion about the importance of business location in various articles on our blog. This concept needs to be looked at from a slightly different point of view for home improvement franchises.

The good news is, you don’t need to invest in a high-street, retail location to run your business. You can easily rent an affordable location to house your office and equipment. What’s more important to consider here is the value of the territory.

The reason home improvement franchises are expensive is that they offer you a ready-to-service territory that has been thoroughly studied for its business potential. For other businesses, it’s rather difficult to arrive at a number of potential buyers, but for domestic service franchises, the number of households gives you a clear idea of your target demographic.

In that sense, it becomes important to choose the territory wisely. The best business practices suggest that you should stay away from the spectrum extremes – virgin, uncharted, untested territories as well as oversaturated markets with stiff competition.

Once you have the territory problem sorted in your favour, you will have less to worry about in terms of short-term competition.

Types of Home Improvement Franchises

There are dozens of types of home improvement franchises that cover the entire range of home services – from appliances to gardening and flooring to furniture. We will restrict ourselves to the most popular types here.

Kitchen Improvement Franchises

Almost every house needs kitchen improvements from time to time. On an average, a UK homeowner spends a minimum of £2,500 on kitchen improvements each year. Kitchen improvement franchises aim to cater to these needs in their allocated territory.

Typical kitchen improvements include installation of appliances, redesign, refurbishments, modular conversions and utilities.

Furniture Franchises

Traditionally, furniture businesses haven’t really been looked at as a part of the home improvement sector. Now, with the advent of the rent-it-all lifestyle, it’s safe to include these here.

Typical furniture franchises have two USPs – buying and selling furniture to homeowners and repairing existing furniture. While the potential of furniture repair industry isn’t quite appealing, there’s certainly enough room in the buying, selling and renting space.

An important task while running any furniture business is to strike the perfect balance between logistics, market trends and local interests. If you get this right, this type of home improvement franchises can be as lucrative as any.

Landscaping Franchises

Running a landscaping franchise is all about bringing experience and specific expertise on board. Be warned – landscaping franchises will cost you much more than most other home improvement franchises.

The reason for these high – at times, prohibitive – levels of investment is the nature of the job you will be expected to do. You will need to get on board trained and certified design professionals and, quite possibly, hire the services of architects and planners. These top-of-the-line professionals will, quite obviously, cost a lot.

But it’s not all bad. Landscaping can be a hugely profitable business if you operate in a high-income territory.

Gardening Franchises

Gardening franchises are slightly different. These are thoroughly service-oriented franchises that aim to acquire regular, returning customers (unlike landscaping franchises).

Utility and Repair Franchises

Domestic services have long been scattered. Utility and repair franchises aim to resolve this problem by clubbing multiple services like plumbing and roofing together. This is again a relatively novel business idea that has, so far, been fairly successful in urban areas.

Property Maintenance Franchises

Property maintenance franchises use a theme similar to utility franchises. The biggest positive for such franchises over other types is the loyalty-based revenue model. Once you have a customer on board and you provide good services to them, you can rest assured that you will form a long-running business relationship with them.

Property maintenance franchises largely cater to landlords who have multiple properties under their hold.

Renewable Energy and Air Quality Franchises

Renewable energy has forever been a fringe concept – but this is changing. More and more households in the UK are willing to invest in renewable energy to benefit from various allowances and play their part in a greener future. Solar power franchises are the best exponents of this idea.

Air quality franchises are an extension of utility franchises, and aim to provide cleaner, healthier air to houses and places of business.

Flooring and Roofing Franchises

Flooring and roofing are among the most requested home improvement services. Many homeowners hire roofing and flooring experts every two years to keep their properties in good health – and in this lies the real business potential for flooring and roofing franchises.

Premium Services and Value Addition Franchises

These franchises cater to the high-end homes that have premium requirements. This niche can be tough to crack, but equally profitable once you get in.

A great example of this are swimming pool franchises. While the demand may not be as widespread as other services, swimming pool franchises can turn over a sizeable revenue with only a handful of clients. The downside is that such services are overly dependant on the disposable income of their target customer base.

Should You Buy a Home Improvement Franchise?

Buying a home improvement franchise – or any franchise, for that matter – can be a difficult decision to make. At franchise4u, we receive countless questions from people who want to buy a franchise, but they aren’t sure-footed. Before we go any further, we would urge you to read through our free franchising guides to know what it really takes to run a successful franchise business.

As far as home improvement franchises go, the first consideration should always be your ability to invest. Since these franchises will cost you a significant sum of money, make sure that you know the risks associated with the business. Preparing a contingency-proofed business plan can paint a clear picture of risks and opportunities.

The second consideration should be the expertise and experience that you bring on board in your personal capacity. Prior experience in the given field will always come in handy, and you won’t have to learn ‘on the job’.

Lastly, you should be able to carry out a thorough, on-field and fact-based market research that is customised for the territories you may have shortlisted. It will tell you in no uncertain terms what the potential of a franchising opportunity is.

Free Download: Our Complete Franchise Checklist

Top Home Improvement and Repair Franchises in the UK

Let’s take a quick look at some of the most popular and innovative home improvement and repair franchises in the UK.

Value Doors

  • Minimum Initial Investment: £10,000 (plus VAT)
  • USP: High-quality, low-maintenance external doors
  • Low/no royalties
  • Thorough support
  • Staff training
  • Start on a budget
  • Associate BFA Member

Surface Medic

  • Minimum Initial Investment: £25,500 (plus VAT)
  • USP: Sophisticated surface repair
  • Relatively untapped market
  • Novel services that are gaining in popularity
  • Extensive training and support
  • Assistance with marketing

Apollo Blinds

  • Minimum Initial Investment: £17,000 (plus VAT)
  • USP: Specialty blinds, curtains and awnings for domestic and commercial clients
  • Exclusive distribution rights for major brands
  • Staff training and business support
  • Associate BFA Member

Pro-Tect Alarms

  • Minimum Initial Investment: £25,000 (plus VAT)
  • USP: State-of-the-art home security solutions
  • 12+ years in operation
  • Exclusive territory rights
  • Funding support
  • Training and marketing assistance
  • Valuable and popular brand name

Gautier Furniture

  • Minimum Initial Investment: £250,000 (approx.)
  • USP: High-end furniture
  • Available in 65 countries
  • A popular brand name with hundreds of high-street locations in operation
  • Funding support may be available
  • Ideal for urban territories

EnviroVent

  • Minimum Initial Investment: £19,950 (plus VAT)
  • USP: Sustainable, efficient ventilation solutions
  • Exclusive territory rights (400,000 homes)
  • Extensive business support
  • Consistent knowledge transfer
  • Full BFA Member

The Takeaways

  • Choose your franchisor based on your industry experience.
  • Be prepared to make a large upfront investment.
  • Home improvement franchises require you to invest in your staff.
  • Choose your territory only after conducting a thorough market research.

Talk to operational franchisees before you sign a franchising agreement.

Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

November 14, 2018

Thinking of buying a fast food franchise? Here are 10 points you can’t afford to miss.

Franchising is not, in itself, a business. It’s just a business model that powers hundreds of businesses turning over dozens of billions of pounds each year in the UK. The numbers are good enough to depict the scale and magnitude of the popularity franchising enjoys – but it wasn’t always like this.

When franchising was still a novel idea, there weren’t too many takers. Giving away business know-how to strangers for money just didn’t make sense to many. The catalyst for change was the food and beverage industry – undoubtedly the foundation of modern franchising.

A quick visit to any local mall and a stroll down the high-street are good enough to understand this impact. You just can’t help bumping into brand-name restaurants and takeaway joints. If this gets you excited about jumping on the bandwagon of fast food franchises, here are 10 points that will help you make an educated, informed decision.

1. Understanding the Market for Fast Food Franchises

A general perception about the food and beverage industry is that of unpredictability. Many outsiders find it extremely difficult to break into this industry, thanks largely to knowing too little about the industry.

The food and beverage industry has always shared a huge chunk of consumer spending in the UK. More importantly, this industry has been the largest manufacturing sector over the last ten years. At £110bn, the annual revenue generated by this industry props up the national GDP by about 7%. The present annual growth rate stands at an impressive 10% (much higher than the national average). These numbers, from no viewpoint, are insignificant.

The growth is fuelled by the ever-rising number of people who prefer to dine out. In 2017 alone, UK diners spent over £54.4bn on eating out.

2. The Seemingly Impact-Proof Demand

Now that we have established the enormous size of the food and beverage industry, let’s take a look at why the fast food industry, in particular, has been successful.

Much of the credit for this success goes to the nature of the demand this industry enjoys. Fast food – a few decades ago – was a thing of indulgence. Today, it’s become a way of life. We all have – at one point or another – preferred fast food over elaborate meal plans. Such deep is this effect that 62% of millennials in the UK choose to dine out, order delivery or take fast food out over long-winding dinners and restaurant meals. Considering the increasing purchasing power of this demographic, the demand side for fast food franchises seems to be well taken care of.

What should also come as a promising sign for you if you are thinking of investing in a fast food franchise is the very nature of this demand. The food and beverage industry passed the trial by fire throughout the turbulent 2008-12 period, coming out with flying colours. While fancy restaurants and top-of-the-line diners may feel the heat during economic slowdowns, fast food franchises can rest easy, given that their appeal lies in the affordability for the end customer.

3. The Brand Value Factor Has Kept Fast Food Franchises Going

While discussing what franchising really is, we made a point that the case for franchising is based on the franchisor’s brand value and the replicability of the business model.

As far as the brand value goes, fast food franchises are perhaps the best exponents of franchising. Brand loyalty has played a huge role in shaping up the 21st century consumer market, and this is exactly why fast food franchises – not just in the UK, but the world over – are making it big.

Walk into any McDonald’s or order from any Subway – the ambience and the food are bound to give you the same experience. This experience is the physical, tangible way for the brand value to make its presence felt.

By buying and running a fast food franchise, you can instantly get associated with a brand that already has fans and loyal customers.

Recommended: Thinking of Buying a Franchise? Our Free Franchise Guides Have You Covered!

4. The Importance of Location

For fast food franchises, the location has the power to make or break the business. The brand value is important – as we just saw – but it can take your business only so far. To actually attract new customers, you need to be operating in a location that invites heavy footfall.

If you build it, they will come – or maybe not. But if they see you, they will definitely come!

In this sense, fast food franchises are quite similar to retail franchises. Just by being in front of people is often enough. This is also the reason why you see many fast food restaurants often changing locations. The customer is loyal to the brand – not to the individual franchise or location. So, before putting your money into a fast food franchise, do make sure that you have assessed the potential of multiple locations through a detailed market research.

5. How Much Does a Fast Food Franchise Cost?

This is probably the burning question that led you to this page.

The answer, we’re afraid, is never the same.

There are so many fast food franchise opportunities available that it’s impossible to arrive at a reasonable average or even a small range. What we can tell you instead is that fast food franchises don’t come cheap.

A typical A-list fast food franchise – think McDonald’s, Hardee’s, Dunkin’ Donuts or Subway – will require you to put up a minimum initial investment of £400,000 to a whopping £2mn. A lesser-known franchise can be purchased with a minimum initial investment of less than £100,000.

All the potential and positives we have talked about so far translate into a steep price that franchisees need to pay. Don’t get us wrong – even at such high prices, the top fast food brands find many more takers than they can accommodate. The result? Long wait lines that stretch into years before you can be a proud owner of a McDonald’s or a KFC restaurant!

In addition to the minimum initial investment, global brands usually have a rather strange net worth requirement. If you can’t demonstrate that you can cross this bar, even putting together the minimum initial investment won’t help.

On the other hand, there are many lesser-known and thus less valuable fast food brands that are on the lookout for new franchisees to join them. In fact, one of the important motives behind this article was to bring to your attention the need to identify the potential within such brands.

The bottom line here is – don’t let the price tag discourage you. There are many ways to succeed in this line even when you can’t afford the best of the best.

6. The Economics of Fast Food Franchises

Over the years, fast food franchising has not only overtaken every other franchise sector, it has also set up a proven template for others to follow.

Important parts of this widely copied template are revenue generation, revenue sharing and reinvestment methods. While the sensitive details are usually available to only the franchisees successfully bid for franchise units, there is enough information available in public domain to create an elaborate picture.

The first investment component is the flat-charge franchise fee. Most fast food franchisors charge these fees, with the rest rolling it in the overall initial investment sum.

Apart from the franchise fee, you will need to invest enough capital to cover for the location, security deposits, equipment, inventory and brand materials. Most franchisors require you to put up adequate capital that will sustain the business operations for a period of 4 to 6 months. In addition, top brands will require you to have a further liquid cash pool to fulfil unforeseen contingencies.

The revenue generated by the franchise unit is shared with the franchisor on a fixed royalty basis. The common industry practice sees the royalty set at 4 to 8% of the gross sales (not profits). Additionally, you will need to reinvest a fixed percentage of gross sales as contributions to the collective marketing pool.

7. Should You Buy a Fast Food Franchise?

Buying a franchise is a decision that needs to be taken after a thorough research of every aspect of the business. While it’s easier to skip the ‘investigation’ part for globally known brands, you just cannot afford to rely on what the franchisors want you to hear. To learn more about how to choose a franchise, please head to this free guide.

Are Food Franchises for You?

Running a restaurant – that’s what this essentially is – is not an easy job. You will need to oversee multiple fronts at the same time, 5 to 7 days a week, throughout the year. There are no slow seasons, there are no bank holidays. Most restaurant owners can attest to the fact that this is a business that conveniently blurs the boundaries between your personal, social and professional lives.

Additionally, your people skills will be put to the test every single day. You will need to manage the staff, deal with the suppliers, maintain a good relationship with the franchisor and – above all – satisfy the customers on a daily basis.

If you’re ready to work hard and you are passionate about providing real value to your customers, fast food franchises (or any food franchises, really) can offer you a rare blend of financial success and job satisfaction.

Free Download: The Franchise Checklist Every Would-Be Franchisee Needs to Keep Handy

8. Is This the Right Time to Buy?

You can browse through the performance track records of local fast food franchises to know what the business has been like over the last few months and years. Most fast food franchises post steady numbers throughout the year.

9. The Future of Fast Food Franchises

The future of fast food franchises will be defined by changing eating habits, disparities in the purchasing power of various demographics and, of course, marketing gurus.

Identifying the trends and swimming with the market currents is the best way of getting good returns on your investments in money markets. The same rule applies here. If you keep your eyes and ears open, it’s not difficult to spot such trends.

Vegan lifestyle, for example, has never been more popular in the UK than it is now. If you are passionate about the vegan ways, you can talk to vegan fast food franchises. Similarly, more and more people in the UK are willing to try authentic, global makeovers of their favorite fast foods. Capitalising on such trends early by securing suitable franchising opportunities can save you a great deal of money and keep your business ahead of the curve.

10. Top Fast Food Franchises in the UK

Here’s our selection of some of the most popular and exciting fast food franchise opportunities in the UK. We have tried to keep our selection limited to relatively lesser known franchise opportunities, giving a miss to international bigwigs such as McDonald’s, KFC, Subway & Burger King.

Wafflemeister

  •  Minimum Initial Investment: £100,000 (plus VAT)
  • USP: Handmade Belgian waffles, secret family-owned recipe
  • Wide menu options
  • Operational in major high-street locations across the UK
  • Thorough training and support

Veeno Wine Café

  • Minimum Initial Investment: £75,000 (plus VAT)
  • USP: Premium European wines. Authentic wine drinking experience with accompanying fast food.
  • Thorough staff training
  • Centralised customer service
  • Innovative wine testing campaigns and clubs

Loaded Burgers

  • Minimum Initial Investment: £25,000 (plus VAT)
  • USP: Fresh ingredients, innovative flavors
  • Young brand, growing business
  • Extensive marketing and business support

Auntie Anne’s

  • Minimum Initial Investment: £50,000 (plus VAT)
  • USP: Wide variety of soft pretzels
  • Globally recognised brand
  • 1800+ units in operation
  • Funding assistance may be available
  • Associate BFA Member

Amorino

  • Minimum Initial Investment: £250,000 (plus VAT)
  • USP: Authentic Italian ice cream made using natural ingredients
  • 110 outlets in operation
  • End-to-end business support

The Takeaways

  • Understand the business model before you finalise a particular franchise.
  • Know what the franchisor location and territory policies are.
  • Read through the revenue sharing and reinvestment terms.
  • Talk to operational franchisees.
  • Make sure you are passionate about the industry.
  • Be prepared to work round the clock, through the week in the initial stages.

A Hands-on Guide to Pest Control Franchises in the UK

November 7, 2018

Running a pest control business is not for everyone. But if you put in the hard work, you can definitely make a killing with it!

Running your own business is a tough ask. It takes a mountain of efforts to make things work, and the first steps are hard enough to deter even the most determined. But the upside is worth the risk. The obvious positives like financial freedom and job satisfaction apart, you can actually serve the community and help make people’s live easier with your business.

This, however, means getting your hands dirty – quite literally, in this case.

The pest crisis in the UK is real and widespread. From giant rats that you’d otherwise think belong in the wild to tiny bugs and critters that frustrate you to no end, pests are nearly omnipresent in the UK. What this also means is that there’s some money to be made here. But is buying a pest control franchise a good idea? How much does it cost? What are the considerations?

In this post, we will try to get to the bottom of all these questions.

The State of Pests and Pest Control in the UK

They may not represent the most glamorous business idea, but pest control businesses have been among the most profitable ones in the UK for the last five years. Let’s crunch some numbers to put things into perspective.

  • The pest infestation in the UK is more harrowing today than ever. Experts estimate the domestic and industrial insect infestation growth to be at a staggering 40%. This number for rats, although unsubstantiated, is supposed to stand at around 15%.
  • To understand the gravity of the problem, look no farther than your own kitchen. Nearly 2 in 3 domestic kitchens in the UK are thought to be infested – in varying degrees – by pests.
  • The pest control industry in the UK is, quite surprisingly, still in its infancy. The annual turnover registered by the industry for 2016-17 was £463 million.
  • The growth rate for the industry – at 2% for 2014-18 – does not reflect the market demand. What this also means is that there’s enough space for more businesses, especially in urban districts.
  • There are only about 670 independent pest control businesses in the UK that generate about 7000 jobs.
  • Pest control businesses are subject to stringent health and safety rules and regulations.

Source: IBIS World

The numbers are telling. Pest control is not just the need of the hour for countless homes, they are a matter of obligatory requirements at workplaces, restaurants, hotels, schools, hospitals and many other places of business and social activity.

Pest Control and Local Councils – A Twisted Relationship

The most common question one has before buying a pest control franchise is this – why would people buy my services if local councils provide them anyway?

It would have been a valid question about five years ago. But as things stand today, few local councils – if any at all – provide free pest control. In addition, people prefer to deal with private contractors because of better time management, costs and efficiency of work. Take this report for example. The council pest controllers were called in 143,000 times in one year from the West Midlands alone. Quite predictably, they weren’t able to service all the calls, implying more business for private contractors and businesses. The austerity measures introduced on the government as well as local council levels have been in effect for about five years now. These measures slashed local council pest control budgets by 10 to 20%, giving a clear way ahead for private pest control businesses.

Pest Control Businesses – Understanding the Need for Them

The demand is certainly there, as we have established. But what exactly makes a pest control franchise a viable business option?

To understand this, we have to realise the real need for pest control.

This need stems from three factors – the nuisance value of pests, the health hazards posed by pests and the mandatory regulations that require pest control. Let’s very quickly assess these.

Rats and mice are by far the biggest nuisance creators. Found in varying numbers all across the UK, they are known to cause food, property and health damage that collectively costs millions of pounds to UK residents and businesses. In fact, nearly 60% of pest control calls in the UK are to deal with rats and mice. Since these rodents have adapted to urban, semi-urban, industrial and rural landscapes, it’s virtually impossible to make them irrelevant – the only feasible option is pest control.

The same story goes with wasps, ants and bed bugs – the top three insects that not only make people’s lives difficult, but also force their hand to call in pest controllers many times a year.

Reasons to Buy a Pest Control Franchise in the UK

So far we have talked about pest control businesses and what makes them attractive from the demand point of view. Does this, however, also mean that pest control franchises are profitable?

While we can’t really comment on the level of profitability, we can say that there are enough reasons to consider buying pest control franchises.

  • Pest control franchises are consumer-facing service franchises, meaning that you can expect a great deal of support from customers if your franchisor has a name-brand that’s well-known.
  • This is a specialty service business. So, you can expect much less competition in your territory, as the barrier for entry is quite high.
  • The service itself is ever-useful in nature. We aren’t going to run out of pests anytime soon, and your business will always have homes and other businesses to cater to.
  • Pest control franchises are required in all demographic areas – from the high streets of London to rural Wales.
  • It’s much easier to base your business model on bulk contracts from institutions, organisations and businesses if you operate in a densely populated territory.
  • Since you will be required to visit the work site, you don’t need to spend heavily on renting a prime commercial location. (You will need to speak to the local council regarding the storage of chemicals and pesticides.)
  • Buying a pest control franchise means that you get to enjoy all the benefits that come with franchising in addition to the brand value – marketing budget, ready-to-deploy know-how, staff training, assistance with necessary certifications, customer support and troubleshooting.

How Much Does It Cost to Buy a Pest Control Franchise in the UK?

Right, we now get down to the most important question of them all.

The reason we picked pest control franchises for this post is simple – it’s easy to get started with one on budget.

“You can buy a standard domestic pest control franchise from a reputed franchisor with a minimum initial investment of £15,000 or more, while a similar commercial franchise will cost you upwards of £30,000.”

This is, however, just the minimum initial investment. It will buy you the franchise licence, basic knowledge, some inventory and training/support for your staff. You will need to have a budget ready for recurring expenses such as rent, insurance, regulatory clearances, certifications and royalties. Another important thing you will need to consider in this context is the cost of mobile vans to carry your equipment and chemicals around. Reputed franchisors do provide finance assistance for buying commercial vehicles. If you want to learn more about alternative finance, our Franchise Finance Guide has you covered.

All things considered, you can get your pest control franchise up and running with an initial capital (rolling for the first six months) of £30,000 to £60,000.

If you can establish your credentials, a pest control franchise can certainly make you good profits.

Recommended: The only franchise checklist you’ll ever need – Download for free

Pest Control – Licences and Certifications Required

The British Pest Control Association is the licensing body for all pest control businesses operating in the UK. If your franchisor is a member of the association, you can get in touch with them to know what licences will be required for your staff. The BPCA website has some very valuable information in this regard. It’s also advisable to contact your local council to see if any additional permits and licences are needed to operate in the region.

Types of Pest Control Franchises

We will classify pest control franchises into three broad categories for the sake of clarity:

  • Domestic Pest Control Franchises

Domestic pest control franchises are limited (usually by licence and capacity) to servicing small-scale domestic projects. The main part of the job here is to answer pest control calls on an as-needed basis in a given territory. The types of pests such franchises have to deal with vary from region to region, but the ‘usual suspects’ include rodents, ants and bed bugs.

Running a domestic pest control franchise is all about establishing a firm business hand in your territory. You will not be required to hire more than 5 pest controllers, given the limited scope of operations.

  • Commercial Pest Control Franchises

This is a direct commercial counterpart to domestic franchises. As an industrial/commercial pest control franchise, you will need to look after large scale operations that involve extensive pest control measures. This, quite predictably, calls for more trained staff, industrial equipment and relevant certifications. This is the reason why industrial franchises are more expensive to buy and run.

There’s a significant upside to these franchises when it comes to the revenue model. Industrial franchises rely on getting into long-term contracts with businesses and organisations. This guarantees a predictable stream of income. From hospitals and schools to restaurants and warehouses, the scope of work is quite wide, and you may want to buy a specialty franchise to make things more manageable.

  • Agricultural Pest Control Franchises

Since agricultural pest control franchises are fewer in numbers, you may not come across many buying opportunities. It’s also a tough market to break into because of the established market order that has been catering to farms and rural estates for decades.

The focus here is to use customised, eco-friendly techniques to help customers deal with large-scale farmland pest infestations.

Should You Buy a Pest Control Franchise?

From fumigations to disinfections, every service you will provide will need to adhere to strict rules and codes. You will, as the operator, may also be personally liable for maintaining safe operations.

In light of these points, pest control franchises are best suited for those who bring prior experience on board. While you don’t need to be trained or certified to run the business, having these credentials will certainly make things easier. Considering the high volume of emergency, odd-hour calls, you will also need to be ready to commit to the business full-time.

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Top Pest Control Franchises in the UK

Prokill

  • Minimum Initial Investment: £15,000 (plus VAT)
  • USP: Domestic + commercial pest control
  • In operation since 2003
  • Over 20 franchises distributed, all claim to be successful
  • Thorough training and support
  • Full BFA Member

Pestforce

  • Minimum Initial Investment: £16,500 (plus VAT)
  • USP: Leading domestic pest control services
  • In operation for over 20 years
  • 68 active franchises
  • Funding support available

The Pest Company

  • Minimum Initial Investment: £16,295 (plus VAT)
  • USP: Eco-friendly pest control services
  • In operation for over 20 years
  • Full BPCA accreditation
  • Funding support available

Whelan Pest Prevention

  • Minimum Initial Investment: £16,995 (plus VAT)
  • USP: Domestic + commercial pest control
  • Recognised brand
  • Proven business know-how
  • Extensive support and guidance

The Takeaways

  • Research your franchisor carefully.
  • Be prepared to be committed to the business full-time.
  • Know what clearances, licences, permits and certifications are necessary.
  • Choose a territory that’s not serviced by the local council.

Get funding assistance from an experienced lender.

Pet Franchises in the UK – Turn Your Passion into a Business

September 11, 2018

If you’re passionate about pets, running a pet franchise can be a great way to support your passion with an attractive, stable and fun income source.

The world of business is always on the move. Almost every industry out there is on the verge of a revolution – one step away from being disrupted. All it takes is one new idea for the entire landscape to undergo a paradigm shift. Despite this, some tenets of doing business are permanent.

Take passion, for example. Without an innate urge to feed it, would we ever see the first car, the first television, the first computer or, for that matter, the first book? While treading on the fences of feasibility, market research and competition, it’s also important to know and understand the role that passion plays in the success of a business. And when it comes to franchising, there’s no better candidate to vouch for this fact than pet franchises.

Running a pet franchise, unlike other forms of franchising we regularly discuss in our blogs, is a delicate proposition. If you can match your customers’ love and passion for their pets, pet franchises have some exciting opportunities for you.

Pet Franchises – Is There Room for One More?

The pet industry in the UK is an interesting phenomenon. The whole idea of selling products and services to pet owners appears to be a frivolous, micro-niche concept – especially to the uninitiated. To dispel this false notion, all you have to do is take a quick look at the numbers.

Pet Franchises

UK National Spending on Pet Services and Products (www.franchise4u.co.uk)

  • As of 2018, approximately 12 million UK households have at least one pet. This means that roughly 45% of all UK households have pets.
  • Quite predictably, dogs and cats are the two most popular pet choices among these households.
  • 26% of all UK households have pet dogs. The total number of pet dogs in the UK is thought to be upwards of 9 million.
  • 18% of all UK households have pet cats. The total number of pet cats in the UK is approximately 8 million.
  • The pet population in the UK has, however, declined from 71 million in 2013 to 51 million in 2018.
  • The overall spending on pet services, care and products, however, has drastically increased in the same period – from £3.77b in 2013 to £4.61b in 2018.

Sources: Pet Food Manufacturers’ Association

Compilation 1

Compilation 2

As can be seen from these numbers, the pet-peripherals industry in the UK is definitely large enough to accommodate innovation and expertise from new businesses. The very fact that pet owners spend thousands of pounds on services and products – from dog treats and cat litters to high-end healthcare and insurance – for their pets should be enough to substantiate these claims.

In short, the good news is – running a pet franchise in the UK will not have you swim against the market currents!

Recommended: Looking for Some Inspiration? Take a Look at These Fascinating Franchising Success Stories!

That’s Well and Good – But What Exactly Do Pet Franchises Do?

Pet franchises come in as many shapes, forms and functions as the pets they aim to service. For the sake of simplicity and order, let’s try to categorise pet franchises into two broad sections:

Pet Services Franchises

This is the most common and popular section of pet franchises in the UK. These franchises are aimed at providing unique services to pet owners in a way that’s replicable and scalable.

Even though pet owners are usually very passionate about their pets, there comes a time when they need help from professionals. This is where franchises providing pet services come into the frame. The basic idea here is to take the hassle out of the equation for pet owners.

Some common examples of pet services franchises in the UK are:

  • Pet handling (dog walking, dog-sitting, dog boarding, etc.)
  • Pet care (veterinarian care, pet grooming, pet medication, etc.)
  • Pet training
  • Pet assistance (pet hygiene maintenance, pet waste removal, etc.)

The scope here is limited only by the imagination – we have already seen pet yoga studios prosper and flourish!

If you have a bright idea (preferably born out of a necessity), you can even think about setting up your own business and having it franchised at a later stage.

Pet Products Franchises

Pet products franchises, in many cases, can also be categorised as retail, high-street franchises. These franchises aim to provide a variety of products to pet owners. Common examples include:

  • Pet foods
  • Pet supplements
  • Pet accessories
  • Pet clothing (yes, really!)
  • Pet safety gear
  • Pet housing

The list just goes on and on. Pet products franchises, when compared to pet services franchises, are more scalable. They are also easier to replicate across categories. So, if you bring to the table some retail experience, these franchises can be a good fit for your interests.

How Much Does It Cost to Buy and Run a Pet Franchise in the UK?

Let’s get to the real issue now – the initial investment and working capital. As you may already know, these are the usual suspects among bottlenecks that make running a franchise business challenging.

The initial investment will depend largely upon the franchisor you choose. A popular franchisor who has a large number of would-be franchisees showing interest each month certainly will cost you more. A quick survey of the available opportunities shows that a small to medium sized pet services franchise can cost you anywhere between £5,000 and £15,000 in initial investment.

This number, however, doesn’t paint the complete picture. In addition to the initial investment that typically covers for franchise fees, know-how, necessary equipment/training and marketing, you will be required to pay for operational costs, royalties, staff salaries, insurance, rent and other incidental expenses. So, it’s safe to say that you can buy and run a pet services franchise in the UK with a total working capital of £20,000 or more.

Pet products franchises tend to cost more, thanks to the larger expenses required to onboard inventory.

Recommended: Things You Must Know Before Buying a Franchise

The Earning Potential of Pet Franchises in the UK

As is the case with every business out there, there really is no upper cap on how much you can make. More realistically, however, pet franchises can generate enough profit to become a reasonable source of primary income for the owner.

The first thing to take into account in this regard is the location you want to operate in. The ongoing trends reveal that pet franchises have it easier in urban markets with high concentration of potential customers. Hence, operating such a franchise in a suburb of a mid-sized city can be both affordable and profitable. The tall claims that franchisors tend to make (from £50,000 to £300,000) often come with a series of stipulations and riders. So, it’s more prudent to take a conservative view of the earning potential of a franchise before you invest your hard-earned money into it. A pet franchise operating in a reasonably well-primed territory can break even in 12-30 months.

This is best illustrated with a representative example.

Pet Franchises – How Much Do They Make?

A small-sized dog grooming franchise costs about £12,000 in franchise fees. This one-time investment covers for all the essentials – from training to marketing. In additional, the initial working capital of – let’s say – £10,000 will be required to get the business up and running. Monthly expenses to the tune of further £10,000 to £12,000 mean that you will spend approximately £150,000 by the end of your first year.

Let’s say the territory allocated to you houses 20,000 households. Given the average pet population statistics discussed earlier, this territory can be expected to have approximately 5,000 households with one or more pet dogs. The first-year market penetration of 10% will mean that you will service 500 customers each month during your first year.

Most dog breeds require topical grooming once every four weeks. If you charge £35 per grooming session, you can expect to make £17,500 per month, or £210,000 per year. Discounting the overall investment and operating expenses from this amount, you will be left with £60,000 in profits for the first year.

Please note that this is a representative example, and the actual returns on your investment will vary, based on numerous factors.

Should You Buy a Pet Franchise?

Pet franchises, while not entirely unlike other franchises, are unique in their own right. It takes a different, more personal approach to decide whether they are a good choice for your business endeavours. For starters, you can try asking the following questions of yourself:

  • Are you incredibly passionate about pets?
  • Do you own a pet? Do you identify with the passion your customers have about theirs?
  • Are you ready to follow a business model that’s based solely on organic growth?
  • Are you comfortable with the initial investment that will be required to get started?
  • Do you bring on board any relevant business skills?
  • Do you have what it takes to withstand competition in your territory?
  • Have you ever used the services of similar franchises for your pets? How do you plan on offering a better experience for your potential customers?
  • Have you conducted thorough market research?

Pros and Cons of Buying and Running a Pet Franchise

  • A great way to channel your creative forces and passion
  • Easy to follow templates
  • Established brand value
  • Making new connections, meeting new people, learning the ropes on the go
  • Extremely rewarding work experience
  • Opportunities to innovate
  • Opportunities to create employment
  • Relatively lower investment/working capital required
  • Reach profitability in a matter of months
  • Easy to secure capital
  • Number of stringent rules, regulations, codes, norms and laws to abide by
  • No room for error
  • Extremely personal nature of the business
  • Difficult to scale

Insurance for Pet Franchises

We have already discussed the importance of having in place an adequate insurance cover for franchise businesses in this blog post. Thanks to the nature of their business, pet franchises need to be more attentive while chalking their insurance plans.

Important insurance covers that a typical pet franchise will need are:

  • Employers’ Liability Insurance

All businesses must have Employers’ Liability Insurance to cover for their employees. If you run a pet franchise, your employees will always be prone to being injured ‘on the job’. Therefore, it’s a good idea to opt for an extra-conservative, more-than-sufficient Employers’ Liability Insurance as a routine operational expense.

  • Public Liability Insurance

The cases of pets causing injuries or distress to the general public are all too common. At times, these damages can end up crippling your business to the point of no return. Therefore, to avoid meeting such unfortunate ends, it’s essential to go for a wide-enough Public Liability Insurance cover.

  • Custom Business Insurance

This part of the overall insurance scheme is often ignored by many pet franchise owners. If you are taking custody of customers’ pets or offering pet products, it’s of utmost importance to have your business covered by a custom business insurance plan. Such plans can be quite handy in covering for any accidental injuries or harm to pets in your care.

Recommended: Struggling for Finance? Our Franchise Finance Guide Has Answers!

Important Codes, Rules and Laws for Pet Franchises in the UK

Pet businesses are required to follow numerous laws, rules and codes before they start trading. The best way to know more about these is to talk to a qualified business lawyer, as well as the franchisor. Some of the common and relevant references in this context are noted below:

Top Pet Franchises in the UK

Let’s take a look at some of the most popular pet franchises in the UK to give us an idea about their USPs, the initial investment required and the features they offer to their franchisees.

Oscar Pet Foods

  • Minimum Initial Investment: £8,995 (plus VAT)
  • USP: Customised nutrition for pets
  • Thorough guidance and pet behavioural training
  • Popular brand name
  • Extensive marketing support
  • Corporate clothing, accessories, liveries and other paraphernalia included
  • Bespoke marketing tools
  • E-Commerce advantage
  • Full BFA Member

Canine Creche

  • Minimum Initial Investment: £42,500 (plus VAT)
  • USP: State-of-the-art dog boarding
  • One of the first national dog care and boarding brands
  • Deep market penetration; 20,000+ annual visits
  • Full accounting support and software setup
  • Choose from fixed/percentage royalty schemes
  • High-end kennelling facilities and training

Longcroft Luxury Cat Hotel

  • Minimum Initial Investment: £50,000 (plus VAT)
  • USP: Premium, high-end cattery
  • The best-known cat hotel chain in the UK
  • Full staff training
  • Extensive knowledge transfer
  • Ongoing support

Barking Mad

  • Minimum Initial Investment: £10,000 (plus VAT)
  • USP: Affordable home dog boarding; Holiday boarding for dogs
  • Exclusive territory allocation
  • Quick deployment of the business
  • Full training and marketing support
  • 2016 Amazon Growing Business Award winner
  • Extensive online marketing
  • Full BFA Member

Trophy Pet Foods

  • Minimum Initial Investment: £8,000 (plus VAT, excluding the costs of mobile van)
  • USP: Direct-to-home mobile pet food delivery
  • In business for 25+ years
  • One of the first specialty pet franchise businesses in the UK
  • Ongoing customer satisfaction, nutritional guidance and marketing training
  • Ready-to-replicate business template
  • Brand accessories, livery and packaging
  • Full BFA Member

Dial A Dog Wash

  • Minimum Initial Investment: £14,999 (plus VAT, excluding the costs of mobile van)
  • USP: New-age dog grooming service
  • Inclusive of a grooming parlour with modern equipment
  • Full training and ongoing sales support
  • Exclusive territory with 175,000+ people
  • Online presence, social media support
  • Inclusive of 1-year PL Insurance

* Fees & features mentioned on this page are merely indicative and subject to change.

The Takeaways

  • If you are passionate about pets, you already have an edge in this business.
  • You can get started on a small budget, without looking for external funding.
  • A well-run pet franchise can turn profitable in a matter of months.
  • It’s important to choose and optimise your territory.

Brace yourself for hefty marketing expenses to acquire customers.

Franchising Market Research 101 – A Complete Market Research Guide for UK Franchisees

August 15, 2018

Thorough market research can pre-empt many problems – from securing affordable finance to maximising the returns on your investment. Learn more about franchise market research in this complete franchise4u guide tailored for novice UK franchisees.

So, you’ve finally decided to give franchising a serious try. You’ve started looking at various opportunities, talking to people-in-the-know and spending hours reading about the challenges, methods and success stories. But where does the preparation stop, and the work begin? How do you find a good franchise opportunity? How do you research the market, grab the numbers and analyse them to draw valid conclusions? Isn’t this all much too confusing, if not downright disorienting?

If it makes you feel a little more at ease, there are thousands – if not tens of thousands – of people like you who know what they need to do but have no idea how. In case you still haven’t familiarised yourself with what franchising is, how it works, why it’s on the rise in the UK and everything else would-be franchisees need to know, do visit and bookmark our free franchisee guides. Once you’ve gone through all of them, you’ll be more sure-footed about whether franchising is a good choice for you and the amount of hard-work, dedication and perseverance it takes to make a franchise profitable.

Once there, do come back to this page – and everything that follows below will make a lot of sense to you.

So, let’s get started!

Franchising Market Research – The Importance of Getting It Right

Running a business is, at the end of the day, all about staying on the right side of the numbers. If you can make numbers work in your favour, you’ve won the battle and you’re well on your way to winning the war, as well. That, perhaps, is the best way of saying that market research matters – a lot.

“What is research, but a blind date with knowledge?”

  • William Henry

William Henry, one of the leading British chemists of all time, has said in less than ten words what we will struggle to say in a thousand. Research of every which kind, from the scientific and artistic to the academic and entrepreneurial, has only a few definite objectives to aim at – learning things, gathering data, finding facts, uncovering myths and getting one step closer to the truth.

Market research is not at all different in this regard. As a franchisee, the market research campaigns you conduct will tell you a whole lot more about the business than the franchisors are willing to let through. More importantly than learning the good about your future franchise business, you’ll learn the bad and the ugly. That, in our opinion, is one of the most significant benefits that franchise market research offers.

Benefits of Franchising Market Research

  • Better insights into the state of the market in terms of supply and demand
  • Better understanding of the target demographic
  • Better knowledge about the existent competition
  • Clearer grasp on numbers
  • Higher chances of being able to secure franchise finance

Now that we have established – in principle, at least – why franchisees must conduct market research, let’s move on to what it exactly is.

Recommended: Here’s Why You Should Never Ignore Resale Franchise Opportunities.

What Exactly Is Franchise Market Research?

To understand what franchise market research is, we first need to understand the scope of business market research in general.

Researching a potential business opportunity invariably involves researching the market itself. A savvy entrepreneur with a brilliant idea could still get it all wrong by entering the wrong market or entering the right market at the wrong time. A typical business market research project will aim to shed light on the following:

  1. The market appetite – the interplay between the supply and the demand
  2. The purchasing power of the target demographic
  3. The inherent utility value of the product or service being sold
  4. The economic viability study
  5. The competition review/intelligence

As we mentioned earlier, these are the standard questions most business market research studies seek answers to. But when it comes to franchising, some fine-tuning is required. After all, to get the right answers, you need to ask the right questions!

Let’s see how this process shapes up for franchise market research in the UK.

1. The Market Appetite

The tug-of-war between the supply forces and the demand forces is at the very heart of modern economics based on the fair competition as envisioned by Adam Smith. So, if you’re about to dive into the world of franchising, you must – and there’s no way around this – be not only familiar but also proficient in the understanding of these ideas.

What is Supply?

The supply forces are, in the simplest of terms, the collective availability of a given product or service in a given location. The rarer the products, the easier the business!

What is Demand?

The demand forces are made up of the need and desire quotients of a given product or service in a given market. For a small business with limited market-muscle, it makes a lot of sense to swim along the supply current, rather than trying to break through.

Making sense of these forces is much easier than it may appear. It’s all, eventually, about common sense. You sell what sells and you don’t what doesn’t – that’s the gist of it all.

So, when you decide to buy a franchise or enter a particular franchise industry, you should always know how ‘hungry’ the market is for the things or services you are going to sell. The market appetite is a massively important factor in the success of a business, and the eventual scalability.

2. The Purchasing Power of the Target Demographic

The purchasing power of the demographic you will be targetting should always be the backbone of your important business strategies – from selecting the right products to setting the right prices.

If you are going to buy a luxury fitness franchise, it goes without saying that you first need to study the average fitness expenditure of a family in your franchise territory. It will make all the more sense to switch to an affordable yet feature-rich gym franchise if the territory you want to operate in is a predominantly middle-class suburb.

3. The Inherent Utility Value of Your Business

Not all businesses can stand the test of time. The ‘death-rate’ of new businesses in the UK – standing at 12% – is a telling number in this regard.

What goes wrong in all these cases, then?

The reasons can be many and wildly diverse, starting from the common lack of capital to a chain of rare, unprecedented market upheavals. But the recurring theme in many of such business-demises is the loss of value of the product being sold. So, when you are choosing and buying a new franchise, you should always be adequately sure of the fact that what you’re selling will still be a valuable commodity or service ten years down the line.

This is a solid reason why service-based franchises are so common around the world. Services like childcare, fitness or domestic cleaning are never really going to run out of takers, meaning that if you buy such a franchise, you can be fairly certain of business longevity if you run your business the right way.

4. The Economic Viability Study

Your franchise market research enters a critical stage at this point.

Since it’s all about making profits, the economic viability/feasibility study will always be the cornerstone of not only your business plan, but your business itself. You will make every single business decision based on this study, and so will your creditors and investors. So, it’s of utmost importance to have a fair, conservative and fact-based economic feasibility study before you invest a single pound into a franchise business.

Such a study is aimed at giving you a good idea of the following:

  • The Incomings

The incomings predominantly involve the revenue your business can generate based on various factors, chiefly the market appetite, that we have already discussed.

Let’s consider the example of a fitness franchise that will operate in a mid-sized city. The territory allotted to your franchise covers, say, 15,000 households accounting for 35,000 adults. If your projections show that you can successfully get 2% of these people on board, you can hope to see 700 new registrations throughout your first year. A monthly membership fee of £25 means that you can generate a sum of £17,500 per month (upon surviving the first year).

This will be the primary – in most cases the only – component of your incomings.

  • The Outgoings

The outgoings account for every expense that you need to make in order to keep the business running. From the interest on the borrowings to staff salaries and from franchise royalties to maintenance/operational expenses, there are numerous heads under which the outgoings will be divided.

Carrying on with the last example, let’s assume that the monthly expenses collectively amount to £12,000. This will mean that your franchise will generate a net profit of £5,500 per month, based on conservative estimates.

The primary focus of carrying out this study is to make sure that the business has enough potential to generate adequate returns on your investment within 2-3 years. If not, it may well be prudent to look at the next opportunity that comes your way. If you aren’t familiar with how these studies are conducted, it’s a good idea to hire a professional business analyst and an accountant to crunch these numbers for you. It will not only lend a third-party, neutral perspective to the whole endeavour, but also assure your prospective lenders about the promise that your business holds.

5. The Competition Review/Intelligence

The next up is the review of your competition – local, national and even global.

The stress here will, of course, be on the local competition. This competition includes the local businesses that are in direct competition with yours, along with the ones that may pose a tangential or peripheral challenge. Reviewing your competition essentially includes taking stock of what the competitors are doing right, where they are lacking and how you can capitalise on those ‘openings’. Some common parameters to study in this regard are: ongoing prices for the competing products or services, marketing budget, brand recognition, territory exploitation, relationships with suppliers etc.

The customer acquisition strategy for your future business will be directly impacted by the actions of your competitors, and hence, conducting a thorough review of the competition should be an integral part of your market research project.

Ways to Conduct Franchise Market Research

Now that we’ve seen what market research is, you must be wondering how you can stay on top of all these minutiae without any prior experience.

The answer is – you don’t always have to!

There are numerous market research companies out there that can – at no great costs – can provide fast, reliable and comprehensive market research. You should, however, always know how to interpret the reports provided by such professionals in order to make the right calls.

If you don’t wish to hire such professionals, you can invest a few weeks of your own time to find out the ground reality of the business you want to enter. Talking to existing franchisees, as we have suggested in many of our free franchising guides, is a great starting point in this direction.

Recommended: The Latest News, Events & Developments in the UK Franchising World – Bookmark This!

The Internet, Social Media and Networking – An Open Secret to Franchise Market Research

There’s no equivalent event, creation or design throughout human history that can possibly rival the impact that the internet has had on human life. This invisible giant, quite literally, rules every waking moment of our lives, and there’s no reason why you can’t harness its power to fuel your very own and fully organic franchise market research project.

A small step – as easy as Googling the franchisor, the franchisees, the brand and the competition – can reveal a great deal of information. This information can well be the base for the next steps in researching the market. Moving on, you can visit the social media profiles – Facebook, Instagram, Twitter, Pinterest, to name a few – of your competitors to see what they’ve been up to, how engaged their customers are with their profiles and what sort of ‘social proof’ their products or services have established.

Pro franchise4u tip: Save/bookmark the social handles of your competitors – they will all come in handy if and when you decide to run marketing campaigns on Facebook or Google.

As an extension of this effort, you can visit LinkedIn and extract the email addresses of franchisees who work with the same franchisor or within the same industry; popular suppliers; industry experts and analysts. Writing personalised emails requesting more information or answers from people who’ve been there before you often yields great results.

Franchise Market Research – A Handy Questionnaire

Why have you shortlisted this industry?  
Why have you shortlisted this franchisor?  
What do you know about this industry?  
How do you see the product/service you want to sell?  
Have you used this product/service yourself? What is your perception of the brand value of the franchisor?  
Do you live in the territory you want to operate your business in?  
Are you familiar with the ‘ground reality’ of the market in this territory, in regard with this business?  
What does the market appetite study indicate?  
What does the purchasing power study indicate?  
How scalable do you think this business will be, based on the inherent utility value of the products/services being sold?  
Have you conducted an expansive economic feasibility study? What does it suggest about the potential profitability?  
How much competition do you expect to face in your territory? What more does the competition review tell about the challenges in this aspect?  

The Takeaways

  • You must carry out thorough franchise market research before finalising an industry or a franchisor.
  • It often pays to get professional market research services involved, once you have shortlisted franchisors.
  • Having ready a comprehensive market research report is a key to securing franchise finance.
  • Be conservative while projecting numbers.

Assume a neutral – at times critical – view of seemingly favourable stats.

Cleaning Franchises in the UK – Here’s All You Need to Know

July 31, 2018

Commercial & domestic cleaning franchises in the UK are among the safest, evergreen business opportunities. Here’s what you should know about them before you buy one.

Dozens of reasons can be attributed to the immense success witnessed by franchising business models in the UK over the past two decades. Whether it’s the last-mile penetration by big-ticket food and soft-drinks mega-brands or the modest but equally fascinating leap in performance exhibited by local players, this phenomenon definitely says one thing out loud – if you can make the demand count, the business will take off.

This, perhaps, is one of the reasons why some businesses that don’t – at the first glance – look good candidates for franchising are also among the ones that have benefitted the most from it. Cleaning franchises make a great example of this. Traditionally, a cleaning company would rely on a set of longstanding, familiar and local clients to make money. The resource-intensive nature of the business would often prove to be a millstone that automatically pre-empted growth attempts. Franchising, however, has – in more ways than one – set this industry free. Today, thanks to the power of franchising, many UK cleaning franchise businesses have seen tremendous success.

But what exactly does a cleaning franchise business do? Who is better suited to buy or run cleaning franchises in the UK? How much money does it take to do so? What are the other cost implications?

Find answers to these and many other relevant questions in this comprehensive guide to running cleaning franchises in the UK!

Cleaning Franchises – Making the Most of Year-Round Demand

At franchise4u, we have discussed in great depth how the foundation of modern economics – the never-ending duel between the supply and the demand – is always the best indicator of the viability of a franchise business.

As far as the demand side of the equation is concerned, cleaning franchises in the UK have little to worry about. Unless there is a sudden and drastic downturn in the economy, there will always be people and businesses that want and need the services of cleaning professionals. The present state of this industry in the UK is a good reflection of this fact. Let’s review some key numbers in this regard to understand how the evergreen demand is one of the most important things in your favour if you are looking to buy a cleaning franchise business in the UK:

  • The professional cleaning industry was one of the first to recover from the global recession that started in 2008. Since 2010, this industry has grown over 21% per year, whereas the rest of the economy has struggled to touch the 17% mark.
  • In 2017, this industry saw overall turnovers exceeding £24 bn – a sizeable number for any service-oriented industry.
  • Over 700,000 people in the UK are employed in various capacities thanks to the growth of professional cleaning businesses in the last 5 years.
  • When it comes to start-ups, the cleaning industry leads the national average by a fair margin. Similarly, the ‘demise’ percentage of businesses in this industry is much lower than the national average.
  • Average wages in the professional cleaning industry have risen at a rate of 6.4% post 2010 – nearly triple of the national average that hovers around 2.3%.
  • Experts expect this trend to continue over the next few years. By 2024, the cleaning industry in the UK is supposed to generate close to half a million new job opportunities.

 Source: ‘The Cleaning And Support Services Industry Research Report 2017’ by the British Cleaning Council

What is a ‘Cleaning Franchise’?

Now that we have established that the demand can be counted on, let’s see what cleaning franchises are and what they really do.

A cleaning franchise is a standalone service point run by franchisees on behalf of the franchisor. The franchisor typically offers the equipment, training, knowhow and marketing infrastructure to help franchisees get started. The franchisees can then secure a given ‘territory’ to expand their business and profit from the same.

The cleaning franchises in the UK are typically expected to offer a variety of highly customised cleaning services to their customers. The clientele includes homeowners, businesses and government agencies.

Recommended: Here’s why children’s franchises are flourishing in the UK!

Cleaning Franchises in the UK – Major Types

All cleaning businesses in the UK are service-oriented businesses, as we noted earlier. There are, however, a few large businesses that also sell customised cleaning equipment, chemicals and other paraphernalia. However, in this article, we will be focussing solely on cleaning franchises as services, not products.

Based on this, such franchises can be classified into three major categories:

Commercial/Industrial Cleaning Franchises

Commercial and industrial cleaning franchises in the UK are large businesses that focus entirely on offering robust, customised solutions to a variety of businesses, corporations and government agencies.

If you wish to buy a commercial cleaning franchise in the UK, it’s imperative that you have adequate initial experience in the cleaning industry. If you lack in experience, the workload and business management can quickly become overwhelming, resulting in a general drop in the quality of services offered. As a commercial cleaning franchise owner, your job will largely be to acquire clients, hire staff, manage business operations and grow the business. It should also be made clear that commercial cleaning franchises are extremely difficult to run from your home, thanks largely to the nature of business operations and the number of people involved.

For commercial cleaning franchises, the list of clients includes hotels, restaurants, schools, hospitals, office spaces, warehouses, factories and other similar businesses.

Residential/Domestic Cleaning Franchises

As the name suggests, residential or domestic cleaning franchises concentrate on offering cleaning services to individual homeowners, landlords, townships, residential societies, dormitories and so forth.

It’s quite common for these franchises to employ a small team of people in the first few years of the business. Due to the personal nature of services and the small scale of operations, it is indeed possible to run a domestic cleaning franchise from your home.

Customised/Specialised Cleaning Franchises

Customised cleaning franchises, at times combining the features of industrial and domestic varieties, bring to the table speciality cleaning solutions. These solutions are often tweaked and finetuned to suit the project-specific requirements.

The clientele for specialised cleaning businesses range from large scale chemical plants to small, local businesses and housing projects. Your neighbourhood carwash business is perhaps the best example of customised cleaning franchises. Similarly, window cleaners, pet store cleaners and hospital cleaners can also be regarded as specialised cleaning franchises. When it comes to the scale of operations, these businesses are closer to industrial cleaning franchises than domestic cleaning franchises.

Cleaning Franchises – Initial Investment and Working Capital

A large percentage of would-be and first-time franchisees don’t have the luxury of readily available working capital or credit. In fact, while choosing a franchise to buy, most franchisees have the initial investment as the first and most important ‘filter’ criterion. It does make sense too – if you can’t inject enough money into a new business, it’s impossible to make it grow or turn it profitable. Therefore, if you are thinking of buying a cleaning franchise, you should know how much it typically costs and how you can meet these cost requirements.

The initial investment, of course, depends on a number of factors. Some of these are:

  • The type of cleaning franchise you’re buying – commercial, domestic or specialised
  • The brand value that the franchisor brings to the mix
  • Training, equipment and marketing support on offer
  • Location of your business and the market value of the territory
  • Local competition and room for growth

As you can notice, these variables can contribute significantly to the initial investment, and, in return, to the overall profitability of your franchise business. A small-sized domestic cleaning franchise typically costs about £10,000 in initial investments, whereas a medium-sized variant in a more profitable territory costs in excess of £20,000.

These numbers are enough to give you an idea about how much money you will need to buy a cleaning franchise in the UK. There may, however, be other costs to consider, as well. These can be grouped together as ‘operational costs’, and include rent, staff salaries, utilities, miscellaneous expenses, insurance, licences, certifications, royalties to the franchisor and so on. The sum total of operational expenses for the first six months and the initial investment is approximately the working capital you will need to get your cleaning franchise business up and running. Hence, it’s safe to say that if you can raise £30,000 or more, you will be in a very good position to kick-start a cleaning franchise in the UK.

The initial investment for commercial cleaning franchises is higher, as can be expected. A medium-sized commercial cleaning franchise can cost you upwards of £25,000.

How Do UK Cleaning Franchises Make Money?

Unlike retail franchises or fitness franchises, the territory is more important than the location for cleaning franchises. You and your team will be expected to visit the client’s house or workplace to offer your services, and hence, choosing a territory with enough demand to cater to is of utmost importance.

A typical domestic or industrial cleaning franchise will initially align all its resources and efforts towards acquiring new customers. An extensive round of marketing is often required to get the word out. Many franchisors, knowing the importance of this, offer marketing support to all their franchisees. A domestic cleaning franchise operating in a mid-sized city or town will be expected to target a minimum of 10,000 to 20,000 customers in the first six months in order to establish its credentials. Securing the business of customers that can offer bulk contracts – think landlords, housing societies, hotels – often proves to be the most efficient way to meet these numbers.

Most cleaning franchises generate revenue with a subscription model. A fixed monthly fee based on the extent of cleaning required is the norm in this context. This business model can take many variables out of the picture, allowing you to estimate the profitability with much more certainty. This, while true for residential cleaning franchises, isn’t always true for commercial cleaning franchises. A commercial cleaning franchise can register profits by securing only a few sizeable contracts with large businesses. The revenue, in such cases, revolves around building customised, project-specific models that are flexible and offer the customers the benefits of bulk-ordering.

A well-run cleaning franchise with a steady base of customers can expect to break even in 15-18 months.

How Much Can You Earn? – A Representative Example

If you charge £50 per cleaning session, the largest chunk of it will go towards paying the salaries/commissions to your staff and paying for the equipment, chemicals, travel and other overheads. Nearly a third (based on conservative estimates) of the leftovers – let’s say £15 – will then go to the franchisor as royalties, maintenance fees, contract fees and marketing fees. This will leave you with £10, a fifth of which will need to be reinvested into the business. Of the £8 left as profits, nearly 40% will go towards taxes and other incidental charges. So, in essence, a £50 cleaning session will yield a net profit of £4 to £4.80.

Servicing 1,000 customers a month at this rate will thus generate an annual turnover of £600,000, and profits to the tune of £48,000.

Recommended: Things Every Would-Be Franchisee Must Know About Franchising

Should You Buy a Cleaning Franchise?

We have already produced a thorough guide to help you decide if franchising can be a good fit for you, along with a handy checklist. If you haven’t already, we strongly suggest you go through it and learn what it takes to run a franchise business.

Going further, you can ask yourself the following questions to get a fair idea about whether you are suited to operate a cleaning franchise:

  • Have you previously run a business of your own?
  • Do you know how franchising can affect your personal and social life?
  • Have you familiarised yourself with the ins and outs of how cleaning franchises work?
  • Have you conducted a thorough market research?
  • Do you have a well-rounded business plan in place?
  • Are you passionate about the industry?
  • Can you manage the business well while also working closely with your on-ground and in-office teams?

Many cleaning franchises exclusively target women who are either retired or wish to work from home. So, if you happen to fall into that category and you want to establish a business that doesn’t eat up hundreds of thousands of pounds in capital, cleaning franchises can be an option worth exploring.

Pick Your Team Carefully!

Being able to generate employment is one of the most prominent benefits of running a business. But when it comes to hiring staff, you – as a franchisee – need to be very, very diligent and careful.

This couldn’t be truer for cleaning franchises. You not only need to hire trained, efficient personnel, but also be sure that they are just as trustworthy (online CRB/DBS check for employees).

Cleaning Franchises and Innovation

There’s no denying that being able to adapt, survive and innovate is essential to make a business grow and keep it relevant in any competitive market. So, it goes without saying that even when your cleaning franchise attains profitability, it just won’t do to expect it to run on cruise-control. You will invariably need to bring in newer, more efficient techniques and methods of providing the service to your customers.

A great way to do this is to find and secure a profitable niche while also focussing on your central services. For example, a domestic cleaning business can add customised pool cleaning or gardening services as add-ons to attract new customers and retain the existing ones. Similarly, switching to eco-friendly cleaning chemicals and adding recycling services can immensely benefit an industrial cleaning business.

Top Cleaning Franchises in the UK

If you are serious about buying a cleaning franchise, the following overview of some of the best-known names in this industry is a good starting point.

· Sanondaf

  • Minimum Initial Investment: £35,000 (approx.)
  • Type: Commercial/Industrial Cleaning Franchise
  • USP: Touchless disinfection and decontamination for hotels, hospitals and other businesses
  • Extensive training and marketing support
  • Popular in the UK and Ireland
  • Flexible working hours
  • High brand value

· Molly Maid

  • Minimum Initial Investment: £16,975 (Excluding VAT)
  • Type: Domestic/Home Cleaning Franchise
  • USP: All-inclusive home cleaning, specialty spring cleaning, tenancy cleaning and more
  • The franchise fee includes a marketing budget worth £9,000
  • Reputed brand, 30+ years of experience
  • Full BFA Member

· Safeclean

  • Minimum Initial Investment: £10,000
  • Type: Hybrid (Domestic and Commercial Cleaning Franchise)
  • USP: Carpet cleaning, furniture cleaning, stain removal, mattress cleaning, deodorisation, sanitisation and more
  • Large sales volume
  • Thorough training and support
  • 40+ years of experience
  • Full BFA Member

· Dyno

  • Minimum Initial Investment: £45,000
  • Type: Specialised Cleaning Franchise
  • USP: Commercial, heavy-duty drain cleaning
  • Finance support
  • Thorough training and personnel referrals
  • A well-established brand name, industry standard for 50+ years
  • Full BFA Member

· Techclean

  • Minimum Initial Investment: £19,500 (Excluding VAT)
  • Type: Commercial Cleaning Franchise
  • USP: IT equipment cleaning (printers, computers, ATMs, laptops, scanners, systems hardware and more)
  • Unique business model
  • Existing relationships with numerous charities, businesses and government agencies
  • Extensive training and transfer of knowledge
  • Associate BFA Member

· Oven Wizards

  • Minimum Initial Investment: £12,500 (Excluding VAT), plus £240 per month as management fees (Excluding VAT)
  • Type: Domestic Cleaning Franchise
  • USP: Systematic oven cleaning services
  • Allocation of large territories (100,000+ households)
  • Regular training sessions for staff
  • Full BFA Member

The Takeaways

  • Conduct a detailed study of the market.
  • Know your objectives and be sure that the franchise you select meets them.
  • Hire with care.
  • Innovate to expand and grow your business.

Franchise Taxation: Here Are the Taxes UK Franchise Owners Need to Pay

July 4, 2018

A short, informal guide to understanding how franchise taxation works for UK businesses.

Running a franchise business is as much about manning multiple fronts successfully at once as it is about business acumen and good choices. Throughout our free franchising guides, we have discussed how choosing a franchise that works for you can take much of the hassle out of your way. In the same vein, it’s important to note that the streak of good decision making needs to continue well beyond the initial phase to make sure that your business is well-run, well-administered and well-looked after.

Staying compliant with all the applicable laws, codes, norms and regulations – along with the ethics of good franchising – is an integral part of keeping your business on the right side of the proverbial line. Paying your taxes is just one facet of the overall compliance. The scheme of taxes for franchise businesses in the UK is quite similar to that for any other business, with a few peculiarities thrown in. Despite this, understanding this system does often prove to be more of an ordeal than a breeze for many franchise owners. This exclusive and informal tax guide from franchise4u will help franchise owners like you put all-things-tax in a simpler perspective.

Disclaimer: This article does not constitute professional accounting or taxation advice. 

Franchises Do Need to Pay Taxes as a Business!

Many franchise business owners tend to treat their businesses as an extension of a personal endeavour. While not quite wrong in many cases, this treatment just doesn’t work out when it comes to dealing with the taxes you will be required to pay. A franchise you own and run is, after all, a business. So, regardless of the its size, nature or turnover, it will be reported, treated and assessed as such. Therefore, as the first step of tackling the taxes as a franchise owner, you will need to put in place systems that will keep a good track of the incomings, outgoings, investments, borrowings, operational expenses and other financial streams. More about how to achieve this will follow towards the end of this post.

Recommended: Download the exclusive franchise4u franchising checklist – for free!

Common Taxes That UK Franchises Need to Pay

Depending on the size and nature of your franchise business, the exact tax treatment and relevant minutiae will differ. There are, however, a few common and major taxes that almost all franchise businesses are required to pay.

Income Tax

Quite predictably, the income tax ranks right at the top of important taxes that UK franchise owners need to pay each year. Regardless of the industry you operate in or the turnover your franchise registers each year, you will need to file a tax return each year. And, if the net profits registered in a business year exceed the personal allowance (currently sitting at £11,500), you will need to pay an income tax on them, as well.

This is, of course, assuming that you run the franchise full-time as a sole trader and are not employed elsewhere. If your franchise business is only a part-time activity and you draw salary from another employment too, the two income taxes will be calculated separately. The good thing is, running a franchise will rarely affect the tax code you are assigned as a result of your employment.

Further complications arise from the business structure of the franchise and your position therein. For example, if your franchise is registered as a limited company and you hold the position of a director, you will need to pay income tax on the salary or dividends that you draw from the franchise that exceed the personal allowance. In most cases, the salary disbursement systems work within the Pay As You Earn (PAYE) structure. This means that the income tax that you are liable to pay as an ‘employee’ of your own franchise will be deducted directly from your paycheque. The self-assessment returns, however, will still need to be filed each year.

Value Added Tax (VAT)

VAT is one of the most common and widely applicable business taxes in the UK. While the underlying purpose of VAT is to generate a consumer-focussed stream of direct income for the government, many non-commercial entities also find themselves under the purview of this tax. In the most typical scenario, any business that turns over £85,000 in a financial year is liable to pay the VAT. It’s important to note here that unlike the income tax threshold of £11,500, the VAT threshold takes into account the gross sales (derived from sales receipts), and not the profits.

Just like filing the self-assessed income tax return each year, it’s a good idea to have your business registered for VAT even when your annual turnover doesn’t meet the threshold. This will not only give your business a VAT number – an important professional tool – but also keep it primed for growth. There exist three broad VAT rates for businesses that classify services and goods into three categories. The Standard Rate, sitting at 20%, applies to most consumer products and services. The Reduced Rate, currently at 5%, applies to a special class of utility products, healthcare services and other similar items. The third and final rate – the Zero Rate – applies to a variety of daily use goods, services and exports to non-EU countries. You can read more about VAT rates and how they work here.

Corporation Tax

Another important business tax, the corporation tax applies exclusively to businesses registered as limited companies. As the name suggests, this tax aims to extract contributions from profit making corporations, and if your franchise is registered as a limited company, it will most certainly be required to pay the corporation tax on an annual basis.

Thanks largely to its direct impact on the ease of doing business in the UK, the corporation tax is a longstanding point of debate between the governments, leading analysts and businesses. Due to the growing pressure from other countries overhauling their corporation tax equivalents in the aftermath of the global recession that started in 2008, the corporation tax in the UK has steadily come down to 19% in 2018 from 30% at the beginning of 2008. Further extension of these policies means that the corporation tax will soon climb down to the lowest it ever has been – 17%.

The profit thresholds for the corporation tax for businesses in the UK ceased to exist post 2005. Today, every single pound in profit made by a limited company is subject to the 19% corporation tax, and as a franchise business owner, you may need to keep this in mind while drawing a franchise business plan.

Business Rates

Business rates are also among the most commonly applicable business taxes in the UK. The taxes we have discussed so far in relation with franchise businesses dealt with the performance of a business in terms of the profits or the turnover. Unlike these, business rates mainly deal with the commercial occupation of space by businesses. Businesses that occupy commercial properties are all subject to varying business rates.

Therefore, if your franchise business operates from a commercial property such as a shop, an office or a warehouse, your business will need to pay the applicable business rates. On the other hand, if your franchise business is run out of your home, you may only need to pay the local council tax. This, however, is a highly subjective matter that is best checked with accounting and tax experts.

To calculate the business rates your franchise business will have to pay this year, please visit this link.

National Insurance (NI)

The National Insurance is a social benefits tax scheme that has been, in various forms, in place in the UK for over a century. Under this tax scheme, the employers and employees are expected to contribute a certain sum of money on a weekly or monthly basis to the National Insurance Fund that looks after various social benefits, retirement funds and other similar expenses for the government.

As the owner of a franchise business, you will be expected to set up the National Insurance debit protocols for yourself as well as your employees. There are three main classes that franchise businesses fall under in regard with the National Insurance: Class 1, Class 2 and Class 4.

To know more about these classes, please visit this official HMRC guide. To get the National Insurance Number for your franchise business, please follow this link.

Recommended: A franchise owner’s guide to business insurance

Efficient Bookkeeping for Franchise Businesses

The importance of adopting professional ways while running a franchise business just cannot be overstated. This is evident when it comes to bookkeeping – an immensely important part of all business operations. From keeping a neat track of the sales receipts and customer invoices to always staying on top of the supplier bills, loan repayments and franchisor royalties, every single business related transaction needs to go on record. A small enough franchise can choose from a number of softwares available to get this job done to perfection. Efficient, non-complicated and handy bookkeeping can greatly simplify the calculation of taxes.

Should a Small Franchise Business Hire an Accountant?

As things stand today, hiring an accountant to help your franchise business navigate the tricky taxation system appears to be a no-brainer. Professional accountant can not only put your business finances in order but also help you organise your investments, borrowings and operational expenses. Moreover, many accountants offer à la carte accounting services, thereby greatly reducing the expenses incurred to you. In addition, the fees paid to the account are classified as business expenses and are tax deductible.

The Takeaways

  • Know all the taxes your franchise business will be required to pay.
  • Make regular savings to ease the burden of paying taxes at the end of the year.
  • Adopt efficient bookkeeping practices.
  • Hire a professional accountant.

Buying and Running a Children’s Franchise in the UK – What Does It Take?

June 29, 2018

An in-depth overview of the costs, considerations & opportunities in running franchises that aim to exclusively cater to children.

Buying and running a franchise business in the UK is easier, generally more profitable and certainly more popular today than ever. As we have reiterated throughout our free UK franchising guides and blog posts, franchising – when done right – can prove to be a lifechanging turn that can prop up, supplement or even replace your other sources of income.

While almost every business that focusses on retail customers can and has been franchised, children-centric businesses are no doubt among the hugest beneficiaries of the franchising business model. A lot of this has to do with the inherently customer-facing nature of such businesses. Very few businesses seem to require the kind of trust, faith and confidence that childcare and other similar businesses do, and hence, the credibility that comes with running your franchise under an established brand name just cannot be overstated.

In this post, we will take an overview of what children’s franchises are, how they work, what opportunities they bring to the table and what considerations you must make before you buy one.

Understanding the Demand for Children’s Franchises in the UK

No business can ever make it big if it isn’t based on a steady base of consistent market demand. Children’s franchises are no exception to this. If you are seriously thinking about running such a franchise, you are in for some good news in this regard. Children’s franchises are often ‘service-based’ franchises (more about this will follow), and they never really run out of the market demand as long as the overall economy is in a good enough shape.

Let’s take a quick look at some important numbers to understand this:

  • Approximately 18-19% of the entire UK population consists of children aged 15 years or less. This comes to a total market size of roughly 11 million – a good prospect for niche franchise ideas.
  • Even though the birth rate has been on a steady decline, the average rise in population – expected to touch 70 million by 2026 – is promising enough to assume that children’s franchises can stay profitable in the UK.
  • An average UK family spends approximately £10,000 or more on childcare, food and other costs per year for kids aged 5 or less. These costs only go up beyond this age. This is enough to show that parents can and are willing to spend – at times, even outrageously so – in order to afford their children the best facilities, education, healthcare and overall ‘growing-up’ environment.
  • The average monthly spending of a UK family on their children’s after-school activities is estimated to be around £200-250. This is indeed a positive sign for children’s franchises as far as the market demand is concerned.

Recommended: Here’s Why Franchising Is Here to Stay!

Children’s Franchises in the UK – Major Types

There exist quite a few types of children’s franchises and it’s rather impossible to list or discuss all of them here. For the sake of convenience, however, we can categorise children’s franchises into two broad categories – service based children’s franchises and product based children’s franchises.

Service Based Children’s Franchises

Most franchises that cater to children and their requirements fall into this category. These are essentially franchises that offer a variety of ‘services’ across numerous categories. From fitness franchises for children to preschools and playschools, these often tend to be time-intensive from the operator’s point of view.

Product Based Children’s Franchises

As the name suggests, such franchises focus on making products available to children. Depending on the costs of the products involved, the franchisees can either directly sell the products for profit or let the customers rent them for a fee. Common examples of product based children’s franchises include libraries, toy shops and sports equipment franchises.

What’s Popular?

While it’s always possible to come up with a niche idea yourself, many franchisees prefer to go with what’s proven to work. Therefore, when you take a look at some of the most common children’s franchises in the UK, you’re bound to find a recurring theme. This simple assessment is usually adequate to know for yourself what’s popular and how you can make it work for you.

Childcare Franchises in the UK

This is perhaps the most popular category among all children’s franchises in the UK. More and more parents – owing to the difficulties of the modern, hectic lifestyle – seem to require additional help from expert professionals as their children are growing up. From the basic, age-old nursery model to state-of-the-art preschools, playschools and babysitting services, childcare franchises have managed to address this issue, with still ample growing room left. If you wish to operate such a franchise in a town or a city where there is a clear demand for these services, the potential for growth is quite promising.

Clothing Franchises for Children

A clothing franchise for children is, at its heart, a retail franchise, and thus, carries all that is good and bad about retail franchises. For starters, it can yield you a great deal of profit if your franchise can grab a significant share of the market. On the down side, however, the costs involved in maintaining a prime storefront location – along with the frequent changes to the inventory – mean that you always need to be on your toes.

Children’s Education Franchises in the UK

Just like childcare franchises, education franchises for children have been hugely successful and popular across the UK – especially the big cities and relatively affluent towns. Many parents are willing to spend good money to afford their kids a chance of building upon the education they receive at schools. A typical children’s education franchise in the UK offers subject-specific or hobby-specific education. For example, super-niche franchises help children grow their interest and curiosity in their favourite subjects such as mathematics, languages, sciences, history and so forth.

At the other end of the spectrum, tutoring franchises aim to help children get better at what is already being taught in schools. Such franchises usually cater to children between the age of 10 and 15.

Art Franchises for Children

A huge chunk of after-school activities for children in the UK includes learning and mastering various arts. From music to dance and theatre to painting, these arts make for great franchise ideas. Of course, if you are about to go ahead with an art franchise for children, it’s imperative that you not only share the love for the given art, but also are adequately good at it.

Fitness and Sports Franchises for Children

The obesity among children is already at an alarming level in the UK. Therefore, it’s no wonder that many parents are only too happy to let their children take up specialty fitness classes and sports coaching. From yoga sessions tailored for kids to fairly expensive cricket, football or athletics coaching, a number of ideas are already being explored by fitness and sports franchises for children in the UK.

These five mainstream ideas for children’s franchises are further complemented by innovations that target a specific group of children. For example, highly-specialty fitness franchises for differently abled children, reading groups and classes for children facing dyslexia, spoken language tutoring for children recently migrated to the UK etc.

How Much Does a Children’s Franchise Cost in the UK?

This, quite likely, has to be the most important question you would want answered. But unfortunately, there are no straightforward answers present to it.

You will, however, be happy to know that most children’s franchises in the UK cost much less than other popular franchises such as fitness franchises or food franchises. This is partly due to the fact that the most extensive component of the recurring expenses is your time and the services you provide. So, barring the initial investment (franchise fees, rent, equipment cost etc.), the operational costs seem to grow less drastic as your business attains enough stability.

A typical, fairly popular and proven-to-work children’s franchise would require you to put aside at least £5,000 to £30,000 in initial investment. This number can change depending upon the location you wish to operate your business in. In most cases, the initial investment is inclusive of the franchise fee, deposits, equipment costs, training costs and marketing costs.

As far as operational expenses are concerned, all children’s franchises need to bear the common franchise costs such as recurring royalties (5 to 10%), rent, insurance, staff salaries, maintenance costs and so forth.

Recommended: What is franchise insurance and how does it work?

How Do Children’s Franchises Really Make Money?

The revenue model for children’s franchises is non-complicated. If the franchise in question is service based, the customers are usually charged on an hourly or per session basis. For example, a popular music tutoring franchise operating in London charges £10 per session to their customers, with up to 10 children being enrolled in a single session.

For product based children’s franchises, the revenue can be generated via direct profit margins as well as consistent subscription fees.

What Does It Take to Run a Children’s Franchise in the UK?

Running a children’s franchise may well be similar to running other franchises in terms of the economics, but that usually is where the similarities end. You need to possess a special, highly specific set of skills to be able to successfully run a children’s franchise.

Are You ‘Good’ with Kids?

It’s a no-brainer, really.

If you want to run a children’s franchise, you need to be good at handling kids, attending to their unique needs and being patient with them. A lot will, of course, depend upon the age group your franchise will be targetting. This also includes being consistently patient with the parents, attending a more than fair share of frequent phone calls and creating a truly warm, amiable and friendly atmosphere for your customers.

Are You Good at What You’re Trying to Sell?

You need to possess adequate skills – as we discussed earlier – before you try to sell them to others. It always helps to be passionate and experienced when it comes to running children’s franchises.

This is in stark contrast with some of the other franchise ideas out there. You do not necessarily need to be a business graduate to run a retail franchise, but if you wish to run a football coaching franchise, you will certainly need to be good at the sport as well as teaching it.

How Many Hours Can You Put in Every Week?

Children’s franchises are popular among would-be franchisees for being relatively less demanding of their time. Many pre-school and after-school classes, tuitions and nurseries run alongside the regular school year, giving franchisees a good deal of time off. Similarly, many sport and fitness franchises run exclusively during the summer break, giving franchisees the rest of the year off to pursue other interests.

If you are not willing to commit your entire work week to the franchise, children’s franchises can well be the ideal choice for you.

How Much Are You Expecting to Make?

While it’s certainly possible to build a children’s franchise that can potentially replace your regular job, it’s still a steep climb. Therefore, it’s always a good idea to talk to franchisees who have already taken this road before to know how much you can make. You can also go through our free guide to choosing a franchise to learn how informed decision making can help save a significant amount of time, money and efforts.

Other Considerations

To run a children’s franchise is to be responsible for the wellbeing and safety of the kids while they are entrusted to you. Therefore, you will need to be extremely responsible, careful and caring to be able to gain the trust of your customers. Additionally, the franchisor will require you – and your staff – to pass CRB/DBS checks before you are allowed to run the franchise. All children’s franchises also need to comply with the applicable local rules, laws and regulations.

Working with Schools and Clubs

A good way of bypassing the heavy marketing expenses is to negotiate bulk contracts directly with local schools, nurseries and children’s clubs. Many franchisees – especially the inexperienced ones – aren’t even aware of the fact that schools are often all too willing to ‘outsource’ some of their responsibilities.

For example, many schools are open to hiring the services of franchises when it comes to conducting camps, coaching sessions, art tutorials, language classes and other similar extra-curricular activities. If your young franchise can manage to tie up with one or two local schools, it can be all that you’ll ever need to not only get the word around but also generate a reliable and steady cashflow.

Top Children’s Franchises in the UK

Here are six of the most popular children’s franchises in the UK across various categories.

· Tumble Tots

  • Minimum Initial Investment: £14,000 (excluding taxes)
  • USP: Physical activity, agility and concentration training
  • Multiple programmes
  • Exclusive territory allocation
  • Long-standing, proven track record
  • Thorough training and equipment availability
  • Full BFA Member

· ComputerXplorers

  • Minimum Initial Investment: £29,500
  • USP: Computer education made easy
  • Age Group: 3-13
  • Comprehensive training
  • Consistent support
  • Extensive marketing
  • Associate BFA Member

· Tutor Doctor

  • Minimum Initial Investment: £29,700
  • USP: Exclusive, tailored private tutoring
  • Over 500 franchises in operation in 16 countries
  • 17,000+ tutors on board
  • Ongoing support

· Premier

  • Minimum Initial Investment: Starting from £14,950
  • USP: Sport and physical activity training
  • Popular with many primary schools across the UK
  • Extensive training and support
  • Full BFA Member

· Banana Moon

  • Minimum Initial Investment: £60,000
  • USP: State-of-the-art day nursery
  • In-house business and sales advisors
  • Thorough training
  • Ongoing support and marketing
  • Associate BFA Member

· The Creation Station

  • Minimum Initial Investment: £7,999 (excluding taxes)
  • USP: Award winning, unique and innovative art and crafts sessions
  • Ongoing operational and sales support
  • Comprehensive training
  • Associate BFA Member

* Fees & features mentioned on this page are merely indicative and subject to change.

The Takeaways

  • Understand how a children’s franchise is more than a mere business.
  • Know whether franchising is a good fit for you.
  • Conduct a detailed market analysis.
  • Talk to operational franchisees.

Go through our extensive franchising guides before you make a move.

Fitness Franchises in the UK – Should You Buy a Gym Franchise?

May 15, 2018

Here’s what goes into the making of successful Fitness Franchises.

Franchising – a novelty not too long ago – has really come of age in the last few years. From being a mere cost-cutting tactic for retail businesses to being one of the most widely employed business models, this growth has, in its wake, created an industry in itself – an industry that generates billions of pounds in revenue, employs hundreds of thousands of people and helps unlock the entrepreneurial potential of hardworking individuals. It’s no wonder then that the future of franchising in the UK looks very promising.

While there are dozens of business sectors that offer attractive franchising opportunities, the fitness sector has consistently been one of the most popular franchise businesses in the UK. In this post, we will try to overview how gym franchises work, what makes them so popular and what you should know before you decide to jump on board.

The Demand – It’s Certainly There!

The seemingly simple interplay between supply and demand is what allows businesses to become and stay profitable. The most prominent sign of affirmation for fitness franchises in the UK comes in the form of an obvious level of demand.

Some key numbers, as published in the 2017 State of the UK Fitness Industry Report, tell us that:

  • The total number of gym memberships in the UK stands at 7 million, more than half of which are active.
  • The total revenue generated by 6,000+ fitness facilities in the UK is at an all-time high – £4.7 billion.
  • The market penetration, despite the huge turnover, still remains at around 15%, indicating positive conditions for rapid growth.
  • The overall spending by UK gymgoers saw an increase by 44% from 2016 to 2017.

In times when one in four adults in the UK is obese, making us the most obese country in Western Europe, the need for more gyms and fitness clubs is more acute than ever. What’s more encouraging, however, is the fact that more and more people are waking up to the hazards of unhealthy lifestyle, suggesting a great period of growth for fitness franchises.

Also Read: Our series of free franchising guides for UK franchises.

How Much Does It Cost?

It all depends on the kind of franchise you are looking to buy. If you are going after a well-established and popular brand, you will certainly need to spend a lot of money to not only buy the franchise but also to operate it.

Most fitness franchises in the UK operate in the ‘mid-level’ range when it comes to upfront fees and deposits. A franchise unit for a fairly popular gym franchise will typically cost upwards of £25,000 in Franchise Fees. You can find some really low-cost fitness franchise opportunities too, but the perks and business prospects that come with these are usually limited in scope.

This doesn’t always reflect some significant costs such as the rent for the location, equipment, staff salaries and other operational costs. As a part of operating a service-oriented franchise, you will also need to spend more money to insure your franchise against mishaps and other unfortunate possibilities.

All things considered, it’s safe to say that you will need an initial investment of £100,000 or more to get a new fitness franchise up and running. When you buy a fitness franchise from an established franchisor, you usually get an all-inclusive package with the help of which your franchise can become operational right away.

Costs to Consider

  • Franchise licensing fees
  • Equipment
  • Marketing
  • Rent
  • Staff salaries
  • Utilities
  • Insurance
  • Recurring royalties to the franchisor
  • Customer service
  • Other operating expenses

How Do Fitness Franchises Really Make Money?

The most sizeable share of the revenue that fitness franchises generate comes through regular memberships. As we have already seen, the number of people looking to buy new gym memberships is on the rise in the UK, meaning that you – as a prospective fitness franchise owner – have a lot of potential business opportunities to make the most of.

The gym membership fees are decided in advance by the franchisor, with franchisees getting little to no say in the matter. Reflecting the brand value, market demand, facilities provided and of course, the location, these fees can range from £15 per month for a no-frills, basic membership to £100+ for an exclusive membership in a state-of-the-art fitness club complete with a sauna, a swimming pool, an eatery and other facilities.

It’s worth noting here that fitness clubs and gyms have to continually grapple with poor customer retention. It’s a well-known fact that new users – not just in the UK, but around the world –  tend to drop the idea of working out within a matter of months, if not weeks. Attractive offers, low deposits, no joining fees and mandatory yearly ‘lock-in’ sign-ups are some ways in which fitness franchises can deal with this problem.

The Importance of Location

The importance of having an easily accessible, attractive and prime location cannot be overstated for a ‘footfall’ heavy industry like fitness. You want more and more people to notice and visit your business to drive the revenue higher. This is one of the reasons why gyms that are located in premium corner locations in malls and shopping centres tend to do better.

If you can’t afford such a location, it’s still okay, given that you don’t have to face stiff competition. Unlike retail franchises and restaurants, fitness franchises find it very difficult to co-exist and share the territory. So, if you get your location right, you can give your business a great chance of succeeding.

Hire Responsibly

Regardless of the industry sector you operate in, it’s important to have the right kind of people working for you. This becomes even more evident in a service-oriented business like running a fitness franchise. Having experienced, licensed and responsible trainers on board will not only boost the credentials of your gym, but it will also lead to organic, passive advertising that can help your business immensely in the long run.

Marketing – How Vital Is It, Really?

Very few businesses can hope to make it big in this day and age without drawing up effective marketing strategies. The competition is never going to get thinner, meaning that you will have to incessantly keep fighting on this front – even when you are successful. This, many would argue, is common knowledge – but the numbers tell a different story. An independent survey of small businesses in the UK revealed in 2017 that nearly 50% of the participating business owners thought their marketing strategies to be below par. 60% of the surveyed small businesses were found to have no social media presence. If you don’t want your fitness franchise to go down this road, you’ll probably need to employ every trick in the book to get ahead of your competitors.

When you buy a fitness franchise from a reputed franchisor, you will most likely get access to their marketing team, strategies and material. This often involves ongoing marketing support for a recurring fee. Additionally, you can engage marketing experts to enhance your social media presence and target the local customer base more precisely. All these things will cost you money, but – when done right – it can all definitely be worth it.

Innovation Can Open Many Doors for Your Fitness Franchise!

We have already seen that there is a significant level of demand in the UK for fitness franchises. If, however, you want to operate in a location that already seems to be exhausted with gyms and fitness clubs, you will need to innovate and find niches that haven’t yet been tapped.

The good news is, there’s no dearth of such niche ideas as far as the fitness industry is concerned. Think yoga clubs, gyms for new mums, fitness clubs for the elderly, specialty training centres for kids – the opportunities are many and exciting.

It’s important – and we can’t stress this enough – to choose your franchise very, very carefully to minimise the risks.

Do You Have What It Takes to Run a Fitness Franchise?

Ask yourself a few questions before you decide that you really want to buy a gym franchise.

Are You a Fitness Enthusiast?

If you are a fitness enthusiast, love following a healthy lifestyle and enjoy your time at the gym, you will find it much easier to stay connected with your business at a personal level. This is not a prerequisite, but it certainly helps to have this point in your favour.

Do You Possess Good Communication Skills?

Running a fitness franchise will require you to keep in touch with a number of people on an everyday basis – customers, employees, suppliers and more. So, it’s very important that you possess good ‘people skills’ and know how to maintain effective, persuasive communication.

Can You Handle the Stress?

This is an important but often overlooked point. You will need to maintain a flexible balance between your personal life and your work life to be able to draw any satisfaction from your work. Running a fitness franchise is not a mean feat. So, ask yourself if you can work extra hard without letting the long hours get to you.

Are You Good at Managing Finances?

From counting the costs before you get into the business to always keeping a track of the business incomings and outgoings, you need to be extremely good at managing finances – even when you have employees and computers to handle the matters!

Tip:

Read through our free ‘Should You Run a Franchise?’ guide to learn more about what it really takes to run a franchise business successfully.  

Top Fitness Franchises in the UK

Let’s take a look at some of the top fitness franchises in the UK to understand how their features compare. *

Anytime Fitness

  • Initial Investment: £170,000
  • 4,000+ global franchise units in operation
  • Thorough training
  • Monthly revenue
  • 24 x 7
  • Fixed fees

énergie Fitness

  • Initial Investment: £95,000 (inclusive of the Franchise Fee)
  • 100+ UK franchises in operation
  • 15 years of UK specific experience
  • Part time franchise units available
  • Experienced trainers
  • High brand value

Snap Fitness

  • Franchise Fee: £30,000 (excluding VAT)
  • Initial Investment: £170,000 (inclusive of the Franchise Fee)
  • 1,300+ members per UK franchise (on an average)
  • 2,000+ franchise units in operation around the world
  • Financing assistance available
  • 24 x 7

Curves

  • Initial Investment: £40,355
  • 6,000+ clubs around the world
  • Fitness clubs for women
  • Low cost fitness franchise opportunities

* Fees & features mentioned on this page are merely indicative and subject to change.

The Takeaways

  • Know whether franchising is for you.
  • Make sure you choose the right franchise.
  • Conduct thorough market research.
  • Explore niche fitness franchise opportunities.
  • Always stay on top of the numbers.

Franchise Resale – Making the Most of a Great Opportunity

May 8, 2018

Read on to know how a systematic approach can help you get the most out of your decision to buy a franchise resale!

Franchising, in recent years, has opened a plethora of opportunities for individuals in the UK to not just enter the traditionally closed-door world of business but also achieve great success. From common retail franchises to new-age home-based franchises, there exists an ever-growing variety of niches in this sector. As we have already discussed in our How to Choose a Franchise guide, this abundance of choices can often lead to confusion.

In addition, making your first franchise operation work is not as easy as it may seem. Site selection, finance, staff recruitment, accounting, taxation, insurance and quite a few other fronts need to be manned successfully before you can turn your franchise into a well-oiled profit-making machine.

If all this sounds too overwhelming for you, franchise resale can very well be an option worth exploring.

What is a Franchise Resale?

Typically, when you buy a new franchise, you deal directly with the franchisor. Drawing up the Franchise Agreement is the most important step in this process. The terms of agreement and further negotiations take place between you – the franchisee – and the franchisor, without any intervention from a third party.

A franchise resale, however, is an opportunity to buy a franchise from another franchisee, and not the franchisor. For various reasons, franchisees may want to put their franchise up for a sale, rather than merely terminating the Franchise Agreement, liquidating the assets and walking away. In fact, a significant percentage of franchise operators use franchise resale as their prime exit strategy.

So, in essence, a franchise resale opportunity lets you buy a ready-to-run franchise unit from another franchisee.

Dealing with the Scepticism

It’s very natural for you to look at a franchise resale opportunity with scepticism. The most common response in such situations is to think that there’s no way the franchise unit will be up for a sale unless there was something wrong with the business.

While true in some instances, this is never the case for a majority of franchise resales. There are numerous reasons why franchisees would want to sell their franchise units. Some of these include:

Planned Exit

As noted earlier, the sole aim for some franchisees is to add enough value to their franchise unit so that they can sell it off at a profit. As a potential buyer, you should place such franchise resale opportunities at the very top of your shortlist.

Forced Exit

In some cases, the franchisee is forced to exit the business for personal and/or professional reasons. From retirement to relocation and medical problems to tax issues, these reasons can greatly vary in size, scope and nature.

Growth-induced Exit

In some cases, the business grows much larger than anticipated by the franchisee, forcing them to sell it off in order to avoid stagnation.

As a buyer, you will always need to know the precise and true reasons why a particular franchise unit is being sold on.

When Should You Buy a Franchise Resale?

There’s no algorithm that’s set in stone and can tell you with certainty if a franchise resale is the best way for you to enter the world of franchising. There are, however, some broad criteria that can help you come closer to making an informed decision.

The first and the foremost among these is what you – as an entrepreneur – bring to the table. Take, for example, some questions you can ask of yourself before you buy a franchise resale:

  • Have you run a business of your own before?
  • Are you familiar with how to set up a business from the scratch?
  • Are you willing to put in excess resources – time, energy and money – to build a customer base in a new territory?
  • Are you more comfortable with running a proven business model rather than building one of your own?

Answers to these questions can give you an indication of the way forward you should be taking.

Tip: Download our free franchising checklist to help your decision making.

Advantages of Buying a Franchise Resale

The advantages of buying a franchise resale run wide and deep. Let’s discuss the most important of these.

No ‘Cold’ Period

The ‘incubation’ period of a new business can stretch from months to years, depending upon its nature and size. If you buy a new franchise unit that comes with a brand new, untested territory, you will need to be prepared to withstand the initial ‘cold’ period during which sales will be minimal. Much of this period will need to be spent building the market presence, perfecting the business operations and acquiring customers. This will, quite obviously, lead to you making insignificant profits, if not none at all.

A franchise resale doesn’t usually have this problem. If you buy a profitable franchise that can boast of a steady customer base, your business can start making money right from the word go.

Not a Lot of ‘Fine-Tuning’ is Required

This point really comes to the fore if you don’t possess the hands-on experience of running a business. Franchise resale opportunities let you simply take over from the previous owner and continue the profitable ways of operations. You can, of course, fine-tune the business to suit your style, but these changes, in all likelihood, will be peripheral, not critical.

No ‘Staffing Blues’

Recruiting reliable, efficient and experienced personnel is much more difficult than many imagine. It can be all the more tiring – frustrating, even – if you don’t know how to go about it.

With a franchise resale, you can bypass these headaches by simply choosing to retain experienced and trained employees who are familiar with the business. This can not only save you a good deal of money, but also give your business a remarkable head-start.

Minimising the Risks

Buying an up-and-running business poses lesser risks to the investment of capital, provided that you have done your ‘homework’. This, like all other businesses, applies to franchise resales, too.

If you spend enough time researching a franchise resale opportunity, you can get an invaluable insight into the cashflow dynamics, profit margins, market presence and customer analytics of the business. This lets you decide how much money you should invest upfront to buy the said franchise without assuming undue risks. Brand new franchises, on the other hand, have no such track record that you can base your decisions upon.

Ready-to-Use Trading History

This is perhaps the most underrated advantage that comes with buying a franchise resale. As you may well know, the trading history of any business is the first marker of its performance. Whether you want to lease assets to drive growth or you want to take out emergency cash credits, the trading history will always be looked at by prospective lenders and banks.

When you buy a franchise resale, you ‘inherit’ the trading accounts, trading history, assets and credit score from the previous franchisee. If all of these are in excellent health, your franchise business will be off to a great start.

Does It Always Make Sense to Buy a Franchise Resale?

While buying a franchise resale comes with a host of advantages, it wouldn’t be too prudent to say that doing so makes sense in each and every case.

If you have adequate experience of running a business, handling administrative tasks, manning multiple fronts successfully, managing employees, leading a team and staying on top of numbers, you may very well be the right person to buy a new franchise. What’s most important to know here is that franchise resales, thanks to all these advantages, carry a steep mark-up.

From a routine 5 to 10%, this mark-up can go as high as 30 to 50% if the resale opportunity is immensely attractive. So, it only makes sense to buy a franchise resale if you are absolutely sure that the added upfront costs are more than satisfactorily compensated for by the benefits of convenience.

Things You Should Know Before Buying a Franchise Resale

Choosing the best franchise for you is rarely a straightforward decision. Quite a few factors need to be considered and many possibilities weighed before you zero in on a particular franchise, as we have discussed at length in our How to Choose a Franchise guide. Most, if not all, of these things must be taken into consideration while buying a franchise resale.

Furthermore, you should strive to extract as much information as you can about the franchise resale that you want to buy. This includes taking stock of points below:

Why Is the Franchise Being Resold?

Right at the top of this page, we have discussed some of the most common reasons for franchisees to put their franchise units up for a sale. Before you buy such a franchise, however, you must always know fully well why the franchise is being sold on. Having a candid discussion with the seller can give you answers to this question.

What is the Franchise Agreement Going to Be Like?

It’s very important for you to know and understand the terms of the existing Franchise Agreement. Even though you will eventually end up drawing a new Franchise Agreement with the franchisor, studying the existing agreement will give you an insight into the way the franchisor conducts their business.

Is the Mark-up Justified?

Successful franchises will never be resold at a loss. The mark-up on the price will depend upon the sales volume, market share, location, brand recognition and many other factors. However, you should always make sure that the price you’re willing to buy the franchise at is justified.

Do the Accounts Look Good?

This is where you will probably need some help from a professional accountant. Studying the books of the franchise is a great way of assessing the health of the business. It should, however, be noted here that this is possible only after you have indicated your intent to buy the franchise.

Are You Going to Have to Make Too Many Changes?

Does the franchise conform to your idea of doing business?

Are the employees experienced and content? 

Is the customer base steady as well as loyal?

Is the market saturated already?

Many more questions like these will crop up during the course of your investigation. If you think that you are going to have to make numerous changes in the way the franchise operates, it might be a better idea to buy a brand-new franchise at a lower price.

Have You Talked to the Franchisor?

Many Franchise Agreements have resale clauses that clearly state that each franchise resale will need to be approved by the franchisor. Thus, you will need to get in touch with the franchisor to know what their expectations from you are. This discussion will also help you lay down the informal framework for the new Franchise Agreement, if the deal comes to fruition.

How Buying a Franchise Resale Works

Buying a franchise resale is a tad more complicated than buying a new franchise as you will be required to negotiate with two parties – the franchise seller and the franchisor.

Here’s a schematic of steps involved in the process of buying a franchise resale:

1.     Studying the Prospectus of Sale

The prospectus of sale is a document prepared by the franchise seller. It typically contains all the critical information concerning the business to help potential buyers assess the case. As one of such potential buyers, you will need to carefully study this prospectus to understand the merits of the opportunity better.

2.     Arriving at a Number

The prospectus of sale will tell you what the franchise seller thinks their business is worth. As a buyer, however, you will need to arrive at a number that makes more sense to you. Business valuation, especially in regard with businesses that haven’t been trading for long, represents tricky waters. As you will be investing a significant amount of money in this venture, it’s best to hire experienced business accountants to help you appraise the franchise.

3.     Negotiating with the Seller

Once you have the valuation ready, you can negotiate the numbers, terms and other matters with the franchise seller to draw up the sales document. Most franchise resales are subject to other parties – the franchisor, the bank/other lenders and investors – okaying the terms.

4.     Negotiating with the Franchisor

After the initial agreement is in place with the franchise seller, you can finalise the terms of the Franchise Agreement with the franchisor. While many franchisors may agree to use the existing terms for the franchise unit in question, minor tweaks are often required to safeguard the interests of all parties involved.

5.     Completing the Process

The last step involves completing all the necessary legal, administrative and financial processes to finalise the deal.

An Informed Decision, As Ever, Is the Key!

Throughout our series of free franchise resources, we have maintained that making an informed decision can save you time and money. This applies just as positively to franchise resales, too. An in-depth analysis of shortlisted franchise resale opportunities will certainly help you minimise the odds against you and put your business on the right track.