Weathering the Economic Storm with Franchising
Joel Caws - Technical Director, Select Your Franchise
With the Prime Minister warning that the economic storm may not yet be over and with the Budget just a few weeks away its still a difficult time for many. Although reports show that the UK’s emergence from the recession has been a little stronger than previously thought, it might be little comfort for those still struggling to find work or feeling the pinch of wage cuts or unrealised bonuses.
In spite of this, franchising in the UK still appears to be a growth area. Interest in franchising still remains active with new franchise business start ups. Some of this growth could be attributed to the following factors:-
Proven Business Model
Franchise opportunities should be based upon an already proven business model. This makes it an attractive proposition for those interested in start up their own business since they know its been tried and tested.
Franchising has a great track record
Historically, around 90% of UK franchise businesses trading in any given year are profitable according to annual BFA/NatWest National franchise surveys.
Financing
Banks can tend to look favourably on a franchise business start up since it offers more security than a conventional self-employment. This is often down to:
- The fact that a franchise business should be based on an already proven business model (as mentioned above).
- The bank may have prior knowledge of the franchise and have lent already to other franchisees which it can seen have been successful.
It appears we are not out of the woods yet; you only have to read the latest financial and business news to see that. However, there are still ways to ‘weather the storm’ and franchising may well present just such an opportunity for many.
Tags: Economic recovery, franchise business, franchise opportunities, franchising, joel caws, recession
Franchise Business: Hope for victims of Recession Unemployment Trap?
Joel Caws - Technical Director, Select Your Franchise
I was reading news earlier on the state of the global stock-markets and the apparent free-fall in prices. Although I’ve read news on one hand that the recession is over (in the UK, the GDP grew by 0.1% in the last quarter of 2009), it appears that other key factors such as the amount of national debt accrued by countries to alleviate the effects of the recession are a cause of concern to investors. In addition, employment rates still appear to be struggling with many still out of work. The road to recovery appears to be slow and uphill!
For those finding themselves caught up in the recession unemployment trap with little prospect of finding employment imminently, there could be other options to consider. Some may have an idea of their own and look to start up in self-employment. For others, a franchise opportunity could present a good choice.
A franchise business could represent an opportunity to work ‘for yourself’ but not ‘by yourself’. The advantage of a franchise opportunity is that it should be based on an already tried and tested business system. In short, someone else should have already done the hard work of finding out if the idea works or not. If they were successful, then the core idea and its method of service or product delivery is documented and packaged. This can then be presented as a franchise opportunity for others to replicate the same success. In addition, the franchisor will usually provide additional backup and support to help you run their franchise system effectively.
If you are finding yourself out of work currently, considering a franchise opportunity could be a way to a brighter future. Of course, like any other investment, we highly recommend you do your homework thoroughly and research any franchise opportunity to ensure its validity. The British Franchise Association, the Franchise Sections of the major banks and the existing franchisees of the franchise system themselves are all good reference points when it comes to finding out how well a franchise might perform and maximise your possibility of success.
Franchise Views: UK emerges from recession
Joel Caws - Technical Director, Select Your Franchise
I was reading with interest the latest news on the UK economy emerging from the recession. The economy grew, even if not by much, in the last quarter of 2009 signaling the end of the longest recession in over 50 years. It might not be by much but there is a positive outlook at least. It’s promising news for the franchising industry, for both franchisors and franchisees alike.
Franchisors
As the economy begins to grow again it should spark renewed confidence and interest in new business start ups which is good news for franchise recruitment. The extra security and support of a franchise business vs. conventional self-employment should also help bring added confidence to potential buyers especially with the insecurities of the recession still clear in their minds.
Franchisees
For existing franchisees, a confidence returning to consumer spending would of course be a welcome increase in turnover. This in turn has a knock on effect for Business-2-Business franchisees as their customers begin to see increased cash-flow from consumers further down the line.
But we are not out of the woods yet…
Its easy to sit back and think ‘thank goodness its all over’ but we are not out of the woods yet. Businesses can fail coming out of recession due to increased demand for products and services but lack of sufficient cash-flow (caused by reduced business during the recession) to sustain the demand. This can be especially true for business-2-business where there is delay between providing goods and/or services and actually getting paid. Good management of cash-flow, stock and labour is essential to make it through these times.
We can be positive that things are moving in the right direction, but be sure to take a sense of care and diligence to ensure you don’t become trapped through, what is predicted to be, a slow economic recovery.
