Joel Caws - Technical Director, Select Your Franchise

A few days ago, a news article by the BBC reported that UK unemployment rose to 2.64 million in the quarter to October 2011, its highest level in 17 years. It’s clear that the effects of the recession are still with us for some time yet, with the danger of a double dip recession also snapping at the heels of the UK economy if this and next years quarter see a retraction in growth.

Despite the doom and gloom, many of those who have found themselves unemployed have taken control of their own futures by seeking to start up new franchise businesses. Franchises can give you the benefit of establishing your own business but with the added help of founding it on a proven, franchised business model along with the support and training of the franchisor.

If you are one of those affected by the recent rise in unemployment and facing the difficulties and frustrations of applying for new job vacancies with increasingly greater competition, starting up a franchise business could be your ticket to get you back on track.

If you have come out of a previous position with a redundancy package, then it could be that you decide to invest some of this capital into starting up a new franchise business venture. Though some franchises do require fairly substantial upfront franchise fees, there are others which are also affordable to those with lesser available capital.

Whatever your financial situation or preference, you will almost certainly be able to find a franchise business to suit your needs. There are hundreds of different franchises available in the UK in almost every conceivable industry sector from technology to manual labour, from business consultancy to children’s parties, from office based to home based, from retail store to mobile van sales, the list goes on.

If you want to take control of your future and think a franchise business might be an option for you, you could start by using a franchise matching service which is a quick way to find franchise opportunities that are available in your area and that match your preferences.

Carl Reader, Dennis & Turnbull Ltd

Unemployment hit a 17 year high in the three months to August, the latest statistics have shown.

The Office for National Statistics (ONS) released the figures, which show the unemployment rate was at 8.1 per cent, making a total of 2.57 million unemployed people.

The quarterly increase of 114,000 people has been described as ‘horrific’ by Dr John Philpott, chief economic adviser at the Chartered Institute of Personell and Development (CIPD). He said:

“These labour market figures are truly horrific, with the economy shedding almost 15,000 jobs each week between June and August. The quarterly rise in unemployment is reminiscent of an economy in recession rather than any kind of recovery and confirms that the private sector just isn’t creating enough jobs at present to offset public sector job cuts.

“With 5.6 unemployed people for every job vacancy the labour market is back to where it was in the depths of recession in 2009 and the underlying problem is getting even worse given that 1 in 3 unemployed people have now been without work for over a year.”

The number of 16 to 24 year olds out of work is now at its highest level since 1992, demonstrating how important it is for the Government to do more to support businesses to grow and employ more staff.

Commenting, Katja Hall, CBI Chief Policy Director, said:

“Today’s unemployment numbers make grim reading, especially for our young people. The continuing rise in youth unemployment is a grave concern for us all.

“Businesses are still creating jobs and only continuing private sector growth can help us out of the current tumult. With jobs falling in the public sector, it’s vital the Government does everything it can to support businesses to grow and create jobs, and help young people get into work.”

With such a stark outlook, starting a franchise business could be a way out for many stuck in the unemployment trap. A franchise is basically a way to start up your own business using a proven business model with the support and backing of the franchisor.

Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.

The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.

Nick Strong, MD - Select Your Franchise

Recent news reports that unemployment rose in the third quarter of 2010 to 2.5 million. This is the first rise in the employment figure for six months and is reportedly due mainly to losses in the public sector.

Although the UK pulled out of the recession early in 2010, its clear that the effects will be felt for some time to come,  representing a challenge of how to find jobs for those willing, but currently out of work.

It was positive to note earlier in the year the supportive policies for small business put forward by the coalition government. Its clear that small business plays a significant role in driving the economy and it might be considered how small business start-ups, such as those setup via the franchising route, could play a role in helping to alleviate the continued rise in unemployment.

Self-employment through franchising could represent a great opportunity for those caught in the current wave of job loss. If you have come away from an employed position with some capital or finance to invest then what better way to use it than to invest into your future.

A franchise offers a way to start up in business without feeling you are completely on your own. Some advantages in choosing a franchise business include a proven business formula and relevant business training for your chosen franchise business. There are literally hundreds of types of franchise opportunities currently available in the UK so you are unlikely to find a business that doesn’t fit you.

To begin your search for the right franchise for you, you can visit our popular 2 minute franchise matching service.

Joel Caws - Technical Director, Select Your Franchise

With the economy still very slow to recover, many people are asking themselves if now is a good time to start a franchise business or any other business for that matter. Some people are biding their time, holding on to the security of their current employment because other options seem to carry uncertainty. Those who, prior to the recession, might have been considering a job change or branching out on their own, have chosen to sit it out and see what the future brings.

Then there is of course those who have been victims of cutbacks and redundancies; all too familiar news during the course of 2009.

Despite the doom and gloom of the turbulent last few years, franchising has remained a success story. The release of the 2010 Natwest/BFA Annual Franchise Survey confirmed once again that around 90% of franchisees trading in 2009 were trading profitably. This is a statistic that seems to have stood up consistently over the years and hasn’t wavered despite the recession.

The heart of a franchise business is its proven system. By proving a concept and then documenting the processes and formula which achieved their success, a franchisor can provide a system for another to follow and potentially replicate the same success. In addition, many franchise systems are based around highly desirable or ‘must have’ services and products which has helped to protect them against the downturn.

Statistics have shown that now is just as good a time as any for starting a franchise business. Indeed the success rate holds true

Of course no business investment is without risk. However, with careful research and deliberation, good professional advice and guidance from franchise lawyers and financial institutions, and good old fashioned determination and dedication to work hard and succeed, a franchise business could well be your road to a brighter future.

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:

1. The fact that a franchise business should be based on an already proven business model (as mentioned above).
2. 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.

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.

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.

Joel Caws - Technical Director, Select Your Franchise

With the jury still out on when we might begin to see recovery from the recession, the immediate future still holds uncertainty for many. In a recession caused by a banking crisis, which some are likening to the great depression of the 1930′s, recovery could turn out to be a long arduous process.

While some might be sitting it out and taking a ‘proof is in the pudding’ approach, looking out for the positives, while retaining a sense of cautiousness is good business sense. Of course I don’t recommend throwing caution to the wind but some well-structured and informed research can lead to finding areas of growth despite the current economic climate.

Historically, franchise business models have performed well and even flourished in times of recession. This can be especially true where opportunities exist in the provision of necessity products and services.

Banks still appear more cautious than they were pre-recession, however they seem willing to lend funds where they can perceive a good level of security. Thanks to its track record, franchising does provides a level of security which banks look upon favourably and this can put a potential franchisee in good standing when it comes to obtaining finance to start up a new franchise business.

With no real light at the end of the tunnel for the current recession, many people are finding themselves squeezed financially or in a position of redundancy and may look to find new sources of income.  For many, looking at a franchise opportunity as being a way forward can hold promise. However, as with any business investment, professional advice should be taken and proper research carried out. The old adage, ‘Look before you leap’ certainly applies here. With the British Franchise Association annual report showing that year on year, 90% of franchisees trading were trading profitably, now could be the time to consider a franchise as a way to get back on track.

Cathryn Hayes - HSBC Head of Franchising

A new HSBC report undertaken by Delta Economics, reveals that UK companies are emerging leaner and fitter from the recession but could endanger their own recovery by not seeking new finance. This obviously has implications for franchise businesses across the UK many of which rely upon the availability of financing for new franchisees in order to expand their network.

The report, called Business of Recovery, takes into account the input from 2,100 SMEs and 30 business and economic experts.

The report indicates that:

• Today’s businesses risk taking too short term a view and being too self-financing, with just 15% of UK-based companies currently seeking external investment
• Businesses need to be talking to their financial providers now to plan their approach to funding and finance.  This will enable them to make the most of domestic and international opportunities as we recover from the effects of the recession
• If companies hold off from investing for too long they could miss out on opportunities to grow as the economy recovers
• 2% of businesses believe access to finance will be a key challenge in 2010, but 85% are not currently seeking external finance
• 80% of businesses said they “don’t need money” because they’re tightening their belts and running down their own resources, or financing themselves (53%).  Just 17% said they weren’t seeking finance because “banks weren’t lending”

Noel Quinn, Head of Commercial Banking, UK said that as confidence returns, UK businesses should start taking a more long term view.  He said: “I’ve met some very impressive companies recently who are driving their business forward and we’ve been working with them to get their finances right to allow them to grow.  But, overall, we are still experiencing a lack of demand for finance from businesses, despite having made funds available.  We believe that now is the time for companies to revisit financial plans and consider using different types of finance for the future.”

Noel added that more UK companies are looking beyond the UK domestic market to identify opportunities for growth through international trade.

A special 6 minute film, called ‘Business of Recovery hints and tips from business experts,’ is available on our Business Network site.  The film features independent experts and customers providing practical advice and best practice on planning ahead and cash-flow management.

If you would like a copy of the report please email franchiseunit@hsbc.com.

Joel Caws - Technical Director, Select Your Franchise

Of late I have seen the phrase ‘Recession Proof Franchise’ going around. But what exactly is this? And is there such a thing? It would sound to be the perfect answer in the current economic climate if there was indeed a franchise that was truly ‘recession proof’.

I think a more accurate term would be ‘recession resilient franchise” since I have yet to come across a business that is full proof (though please let me know if you find one as I’ll be first in line! ) and in reality the responsibility falls on the operator of the business as to whether it succeeds or fails, whether franchised or not.

Types of franchise which fall in line with the term, ‘Recession resilient franchises’ are generally ‘must have’ services and product supplies. These types of franchise business weather the storm well since they are seen as non-optional or necessity type businesses as oppose to luxury products or services which may be nice to have but, when money is tight, are not necessary for living.

‘Must have’ type franchises usually fall into two categories: business-to-consumer and business-to-business:-

• Business to Consumer
  These type of businesses cover, for example, essential home services such as plumbing repairs, essential household maintenance, cleaning services and the like.
• Business to Business
  Business to business covers, for example, business cost reduction and office cleaning services. These present good choices since their individual marketplaces can be what some are referring to as ‘recession proof’… or ‘recession resilient’ as i prefer to call it.

This doesn’t necessarily rule out franchise offerings which could be considered outside of this scope. There may of course be other types of business that don’t fit into the typical ‘must have’ services but appear to be fairing well in the recession because their offering is particularly desirable at this time. This is worth bearing in mind when doing your research so as not to miss out on what could currently be a good business opportunity.

Ultimately when choosing a franchise, one of the best gauges to how recession ‘proof’ or ‘resilient’ a franchise business is, is their existing franchisees.  When considering a franchise, whether its claimed to be ‘recession proof’ or not, make sure you do your home work. Get a list of a few different franchisees from the franchisor of interest and take time to talk to them about how their franchise operation is bearing up in the light of the recession.  This will give you valuable insight into how well the franchise is doing during what is one of the toughest times on record for businesses worldwide.

Joel Caws - Technical Director, Select Your Franchise

I read in a BBC news article this morning that the UK economy contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.

The BBC report continued that this makes this current recession the longest since records began in 1955. This will likely come as bleak news for businesses up and down the country, especially in the retail sector with Christmas approaching.

So how does this news fair in the franchise market?

Historically, franchising has been resilient to recession and while no business, whether franchised or non-franchised, is not without its own risk the general feeling in the industry is still positive. In fact, some of the most popular franchise chains you can see on the high street saw growth during recessionary times.

The heart of a franchise opportunity is its proven system which if followed correctly, coupled with the backing and support of a good franchisor, results in an effective business which should be robust enough to ride out the down times as well as thriving when the economy is on the up.

Franchising could be a good route back into business for many that have already fallen victim of this current downturn, however as with any investment it should be considered and researched carefully.  Anyone considering a franchise should take time to meet franchisors of interest, get to know their operation, study their background, speak to their existing franchisees and consult their bank and a good franchise solicitor for further help and support.

For a good list of UK franchises there are many online franchise directories as well as franchise publications and exhibitions that take place across the UK.

In official statistics and influential surveys, there have been signs that the worst of the recession may be over for all business including the franchise sector, and that is reflected in the all-important baked bean sales figures.

Baked bean sales growth has been slowing

In the three months from April to June, baked bean sales were up 15% compared with the same quarter of 2008, according to figures prepared by the market researchers Nielsen. 

That sounds impressive, but it shows a slowing in the rate of growth.  However in July and August Baked bean sale growth softened which could show an increase in consumer confidence. 

This is considered an economic indicator as budget items increase in sale when times are tough and decrease when people have more money to spend on luxury goods.

More good news regarding consumer  confidence came from the housing sector at the beginning of Sept.  House prices in England and Wales rose by 1.7% in July compared with June – the biggest monthly leap in value since July 2004, the Land Registry said.   Every region recorded a monthly rise in prices, with the average home valued at £155,885, the analysis found.  

For franchise business and indeed all business these encouraging green shoots are welcome.  The key is for business to focus on changing consumer trends.  Business focusing on price and quality are the big winners in 2009. 

For example the home eating and entertainment sectors of the economy are seeing good growth during the recession.  Franchise business will need to consider how current business models might need to be adjusted to capitalise on current consumer trends.

Clearly the effects of the recession will be with us all for at least a couple of years.  The recession has adjusted how consumers spend their money and the benefits are there for franchise systems that align themselves to these trends.

Nick Strong - Franchise recruitment advisor

Many  entrepreneurs have grown their fortunes during times of recession.  Given that all successful business is built on solving common problems this is perhaps not a great surprise. 

Clearly cash is king in a credit crunch driven recession and those that have cash hold the aces. Shrewd investors can currently buy successful companies that are suffering from a distressed cash-flow at a much reduced value for example. 

On a more positive note successful franchise systems such as Pizza Hut are moving fast to take up the new opportunities that the recession has opened in their market.

During this recession eating in is the new eating out.  Consumers still want the eat out experience of quality food preparation made for them but are saving money by eating delivered food at home.  This market is largely being catered for via pizza home delivery franchises such as Domino’s Pizza.

The UK pizza delivery market is worth £750 million and is set to intensify as Pizza Hut plans an aggressive round of new store openings.

The group, part of Yum! Brand, the US-based restaurant conglomerate that also owns KFC, intends to open 30 to 50 new delivery units a year beginning in 2010 as it attempts to take advantage of the recession-related boom in people eating at home.

Within this, Domino’s UK franchise busienss has enjoyed phenomenal growth with profits in the UK up 25 per cent in the past year as people trim their budgets and stay at home more.

Domino’s franchise has set itself the goal of 50 new store openings every year until it has about 1,000 premises.  For Pizza Hut, the assault on the home delivery market via franchise business development is part of a larger effort to grow its UK business.

This is a great franchise news story for the UK economy and UK jobs.  In total franchise business contributes over £13 billion to the UK economy and supports 0ver 350,000 jobs which makes up around 1% of the working population of the UK according to the British Franchise Association National Franchise Survey.

These are undeniably tough times for the UK’s small and medium-sized enterprises (SMEs). 

Franchise blog Nick Strong

Franchise business makes up a significant slice of the SME sector in the UK with a financial turnover of £13 billion. 

Also the franchise business sector is a big employer providing employment to over 370,000 people.  Franchise business therefore supports over 1% of the UK’s total workforce of about 28 million people.

With the recession continuing, many of the country’s more than four million SMEs continue to have a fight on their hands to stay in business.   Perhaps due to franchise business being built on the replication of best practise the sector is being less effected that many.  This is good news for all involved in franchise business and encouraging for anyone considering entering it.

While SMEs do not generally make the business headlines, they employ 13.5 million people – 59% of the UK’s total private sector workforce – according to the most recent figures from the Department for Business, Enterprise and Regulatory Reform.

Now more than ever it is a time for franchisors to show innovative leadership and franchisees to enthusiastically follow the franchise brand’s proven system that they operate.  All franchise owners should be keeping a close eye on their profit and loss and focusing all efforts on key income driving activity.   This action will help protect and grow SME franchise business and the thousands of people who make their living in the sector.

There are pros and cons of opening a retail franchise in the current recession.  One of the key benefits of opening a retail franchise in the current climate is the softening of commercial lease pricing.

Now is certainly the time to negotiate good deals for lease agreements.  While landlords are struggling to fill high footfall shop space there are deals to be done.

But what about the general fall in trade that has created the opportunity to achieve lower lease pricing.  What kind of a threat is this to the new retail franchise owner?

Clearly the current economic situation cannot be ignored.  It is vital for the would be retail franchise owner to do their homework.  So what steps of due diligance can be taken?

1. Research the market by visiting information rich sources such as www.SelectYourFranchise.com
2. Identify options that suit your interest and investment budget
3. Request information from franchisors of your choosing
4. Short list franchise systems of interest and arrange to visit the franchisor at their head office
5. Find out from the franchisor how they are helpping thier franchisees to trade profitably in the current climate
6. Get a list of franchise owners from the franchisor
7. Call the franchise owners and visit their shops – ask how they are trading in this recession and find out what support and innvoation they have received from the franchisor.
8. Identify the systems you like and those that are perfoming well both in and outside of recession
9. Remember that the economy moves in cycles so this recession will not last for ever
10. Work with your chosen franchisor and, if required, lender to develop your business plan, secure best price property and launch your franchise outlet store.

Finding out which franchise systems are working well in and out of recession gives the would be franchise owner a great insight into the business before opening a retail franchise.  This insight and research can clearly help the franchise owner choose a system that will suit his or her skills and run their own successful retail franchise unit.

Nick Strong - Managing Director, Select Your Franchise

Redundancy victims starting their own companies to escape unemployment are more likely to succeed if they choose successful franchises.

Investing your redundancy cheque in a new business makes much more sense if it is a quality brand with a proven track record, advise experts at Select Your Franchise.

“Most people made redundant will have worked hard and effectively for their employers,” said Select Your Franchise Managing Director Nick Strong.

“So it is an undeserved shock when an effective worker loses his or her job in a recession. People understandably feel very let down.”

“It is natural at such times to explore ways of taking your future into your own hands. Exiting unemployment into self employment may be a valid option for many people.”

But there are risks involved with running your own business – and one of the best ways of minimising them is by investing in a successful franchise brand.

Successive British Franchise Association National Franchise Surveys reveal that at least 90 per cent of franchise owners run profitable businesses.

This is achieved by franchise owners following their franchise brand’s proven system.

Franchise brand owners also provide ongoing training and field support for their local franchise owners.

So how do you know if self employment via franchising is right for you? Self examination in the following five ways is a good start:

1.  Are you self-motivated or do you look for motivation from others? Effective self-employed franchise owners are enthusiastic followers of the proven system they adopt and they are good self starters.

2.  Do you want to follow a proven system or develop your own ideas? Franchised businesses are all about replicating proven systems and brands.

3.  Do you have the backing of your family? There are ups and downs in running your own business so you need your family on board from day one.

4.  Do you have money or equity in your property that you can use to secure funds for a franchise business start up? All businesses require start up and running capital. The amount required is determined by the business system you want to develop.

5.  Look at your strengths. Make a list of what you are good at doing. Do you enjoy working with your hands or behind a desk? Are you a people person? How are you with figures?  Research franchise options that fit your strengths and available business development capital by visiting www.SelectYourFranchise.com.

Mr Strong said: “Clearly self-employment is not right for everyone. There is risk in self employment – but there is plenty of risk in employment too as many have experienced.”

“It’s a matter of choice. Do you want to be master of your own destiny or put your future in the hands of someone else?” he added.

A helpful resource for researching franchise opportunities can be found in the Select Your Franchise Two minute franchise matching service.

It is no surprise to learn today that the UK economy contracted by 2.4% in the first quarter of 2009.  On a more positive front however, The National Institute of Economic and Social Research suggested this month that the UK has started to grow again.  Clearly hastening the end of the recession and getting people back to work remains the number one political priority for Government.

Some good news this summer includes the recently published British Franchise Association national franchise survey.  The survey outlines how the UK franchise community is weathering the economic storm well.  By following best practise franchise businesses can protect themselves from economic slowdown.

Many franchisors are also working closely with their franchisees to help with recession alleviation strategies.  I encountered one example last week when I was invited to attend the franchise conference of Gymophobics franchisees. 

Gymophobics franchisees offer their customers a high level of support in a women’s only gym franchise.  To help customers at this time of financial challenge Gymophobics have worked with their franchisees to adapted their payment method to monthly direct debit rather than annual payments for memberships. 

This action, and others like it, take the interests of the customer’s finances to the heart of the franchisee’s offering to their customers.  In the case of Gymophobics it also provides the franchisees a rolling income and removes the need to resale the membership each year.  Win – win and high customer retention is the outcome for all involved proving that recession can bring opportunity.

Those looking to start a franchise could be forgiven for thinking that due to the recession, this is not the right time and that plans should be put on hold.

However, many leading entrepreneurs are arguing that this is actually the best time to start a business. Richard Branson was recently quoted as saying that “fortunes are made out of a recession. A lot of entrepreneurs get going in the economic depths because the barriers to entry are lower.”

Why is starting a franchise now a good idea?

There are a number of reasons for starting a franchise now.  For one thing the first shoots of recovery have kicked in.  The last two months have seen growth in the UK economy in both housing and retail sales.  Secondly the banks have money to lend now and the rates are good. Finally it is worth noting that cheap finance and a re-emerging economy are good news for any business.

Why start a franchise businesses rather than to own idea start up?

Both own idea business start up and franchise start ups are valid ways of entering into business.  The key difference is that self start ups predominantly fail while franchise start ups predominantly succeed.  The national franchise survey conducted buy the British Franchise Association and Nat West bank uphold this view.  The survey declares that over 90% of franchise businesses are profitable.  Owner idea start up businesses can suffer significant failure by comparison.

Why is franchise business start up more successful than own idea businesses?

Franchise business is built on the platform of proven best practise.  A franchise brand owner will prove his business as profitable and replicable before rolling out his concept to others.  The franchise buyer or franchisee benefits from this proven system by way of training, following the proven system and ongoing business development support from the franchisor brand owner or franchisor.  In this way the franchise business system helps to ensure success for all involved.

10 thinngs to discover before buying your franchise business

1. Take a critical look at your strengths and weaknesses – are you sure you have the capacity, temperament and skills to run your own business? Marketing and selling skills are becoming more important in running a franchise.

2. Make sure you have the full support of your family – the additional responsibilities and demands on your time will inevitably cause some strain.

3. Choose some existing franchises and franchisees to talk to buy visiting www.SelectYourFranchise.com.  Ask how the franchisee’s businesses are performing and what support and service is being provided by the franchisor.

4. For new franchisors, check they have run a pilot, how long did it operate, is it still trading and what has it achieved in financial terms? If no pilot was operated, how does the franchisor know the franchise and therefore will you be successful?

5. Examine how well known the franchise and its service/product are. A good reputation is a head start in business.

6. Look at the market as a whole – find out who your competitors are and how strong their position is.

7. Examine costs closely, in particular the franchise fee and monthly management fee, and whether they are reasonable and value for money; will the margins be sufficient to support the business after payment of regular fees to the franchisor? As a guide, the average franchise fee is £20,000, although this is skewed in view of a small percentage of higher figures. Ongoing fees average 11.4%.

8. Is the training provided by the franchisor sufficient to enable you to run the business successfully?

9. Seek professional advice from an accountant about income and profit projections and from an accountant about income projections and from a solicitor about the legal agreement. Both should have a good understanding of franchising and preferably be affiliated to the British Franchise Association.

10. Talk to the Franchise sections of the UK’s leading banks about the financial aspects of running a franchise and ask them to put you in touch with your nearest area franchise manager. You should also contact the British Franchise Association.

It is vital to focus on doing the basics well at any time in business and even more so during the recession.  Keeping a close eye on key aspects of business management can help ensure a good nights sleep for franchisees.

Four key franchise business management skills that all franchisees should focus on

Get paid promptly

It is one thing to win work and raise invoices, it is quite another to get your invoices paid in a timely manor.  Franchisees should focus time on negotiating payment terms and pushing payment through on time.  During recessions a buyer is king.  However, this buyer power must not be allowed to become abusive of the service provider.  If the franchisee does not have time to chase late payment they should consider instructing their book keeper to carry out this task.  Cash is after all – SANITY!

Protect you personal data

Any business is as strong as its customer base.  The database the franchisee holds is therefore the life of the business and must be protected.  This is especially so if the downturn is forcing staff layoffs.   In addition to this all personal data must be used under the data protection act.  Make sure you take an audit of all personal data and password protect it. 

Keep marketing

The web is providing targeted and measurable return on investment for you franchise marketing purposes.  It is vital that you use your buying power to maximise marketing at the best cost per lead available.  In this way you can keep the flow of new customers coming into your business.  This will protect your profit and prepare you for coming out of recession strongly.

Reduce your costs

Take a couple of days to look at all your costs.  Change telecoms and utility providers if that can save you money.  Look at your contracts and see what you can renegotiate with your suppliers.  You may find that your customers are doing this to you.  Don’t be the one to take the pain – make your own gains by taking cost out of your business.  Two days work could save you a month’s worth of costs.

During these times of recession,  franchise business must focus more than ever on creative ways of growing revenue and minimising fixed cost. 

A franchiser in the US is getting involved with its franchisees to help them reduce their fixed costs.  Fabric-restoration franchise FRSTeam was able to negotiate for reduced rent on some of its locations simply by asking the landlords.  The company is suggesting all franchisees try it.  The tactic is a top strategy for many franchise companies.  The International Franchise Association’s Alisa Harrison says. “At our convention, making it through the recession was topic number one, and renegotiating leases is a big part of that.”

Another strategy to help preserve margin is to negotiate a more flexible salary structure with staff.  Paying more when the company does well and less when it does not.  This can have the affect of creating team focus on supporting and developing activity that yields sales and cash.

Keeping a close eye on the local non-franchised competition is also useful.  Local business operators can be tempted to reduce pricing and service quality during hard times.  They can go out of business as a consequence.  Local competition failure can open the door for significant market gains for the franchise owner’s business.

Buying up business assets from failing competiotrs can be very advantageous to franchise business owners.  Paying for the customer database of a failing competitor for example.  This can significantly increase customer procurement at a price that may be far lower than more traditional methods.

Now is the time of great economic problems.  As every entrepreneur knows, problems are opportunities.  The creative business person in franchising will step up to the plate and use this time to their and their advantage. 

Think outside the box.  It could make your franchise business more flexible with a greater market share.  The outcome may be, that the creative franchise owner will emerge from recession in a much better position than when they entered it.

For Uk franchise information visit – www.SelectYourFranchise.com

For US franchise information visit – www.Franchise.US.com

Does the recession aid or harm franchising in the UK?

Perhaps surprisingly recession and franchising seem to compliment each other.  Why is this?

When a loyal worker finds themselves in a position of redundancy, after years of highly performing in his or her work, he or she can start to think about taking their working life into their own hands.  Some people have dreamed about building their own business for years, but have been to comfortable in work to take the risk.  As a direct consequence of the recession franchising is now benefiting from new entrants that have been forced out of the traditional work place. 

Is franchising good for the individual and the UK economy?

Firstly there is no such thing as a sure thing in business.  However, the British Franchise Association/Nat West survey reveals over 90% of franchise owners/franchisees run profitable businesses.  In addition, the last survey reveals that the franchise sector grew five time faster than that of the UK economy. 

But is is this franchising business a winner during recession?

As with all areas of the UK economy some business sectors are doing better than others.  For the would be business owner, that is considering franchising as their preferred way into business, there are a few considerations that have to be investigated thoroughly before final commitment.

1. Identify that your family is behind when buying and building your franchise business.
2. Look closely at your living costs.  (How much do you need to live on each month and how long can you pay the bills before your new business starts bringing in money?)
3. Investigate franchises for sale at  www.SelectYourFranchise.com (Use the five minute matching service)
4. Select opportunities that meet your interest and are within your capital and lending capabilities.
5. Contact the franchise brand owners via the site.
6. Read the literature you are forwarded, short list options and set up face to face meetings.
7. SPEAK TO FRANCHISEES who operate the franchise in the field and ask them how they trading during recession.
8. Decide, from what you discover, which franchise business is best for you and your family.
9. Prepare your business plan using the franchise information and researching the local market.
10. Approach the bank for business development finance if required (Banks are very favourable towards lending to franchise business due to it success.  However you will need to present a well thought out business plan.  The plan needs to show that you have given thought to the business sector you will enter.  It must document the findings of your local research and demonstrate a clear case for your new franchise venture.
11. Take the franchise contract to an accredited British Franchise Association lawyer for advice before signing.
12. Once you enter your chosen franchise business system, enthusiastically follow the brand’s proven know-how to achieve best returns for your efforts.

During and after the last recession franchising grew significantly.  Most of this growth was as a direct result of the recession and thousands of new franchise businesses where born.  Many of these business have matured and have sold.   Selling a successful franchise business can provide franchise owners with a positive rout out of recession and finally can lead to a well healed retirement.

During this time of economic downturn everyone is trying to think of how to beat the recession in their personal lives and in business.  Equifax, the UK body that holds credit reference information, recently put out a survey that asked participants to indicate their expected income for 2009.  Interestingly over 35% stated that they believed their income would fall during 2009.  There are a number of reasons for this.  People in manufacturing did not expect to get overtime and other participants feared that their company would fail or that they would be made redundant.

Options to consider

While some people wait and hope that their jobs will be safe, others are taking their futures into their own hands via looking into self employed franchise business development.  Yes spending in the UK economy is down but that is not across all business sectors.  Some businesses are advancing during the downturn.  These successful concepts offer essential and desirable services better and more cost effectively than the others.  Quality and pricing are the key focuses now more than ever. 

Choosing your franchise to beat the recession

As sales in the UK grow the recession will gradually start to ease.  Over recent years franchise growth has been over five times greater than that of the UK economy.  This is good news for everyone involved in business format franchise development including owners, employees and customers.  So which franchise is best to buy and develop?

Buying a franchise is all about longevity.  Fads never work in long time business development. 

What services are in demand now, during the recession?
Which brands are advancing historically and at the moment, during recession?

Identifying these points will help a franchise buyer to determine what franchise to work with.  It is easy to find out which brands are effective during the recession.  Simply contact your chosen franchisor via options listed for you on www.SelectYourFranchise.com, visit the franchisor and then speak to their franchisees.  

The franchisees will tell you how they have performed historically and during the recession.  They will also tell you how innovative the franchise brand owner has been in supporting them effectively though recession.  Find out the brands that have and are still growing and focus your attention on those for your future.

Beating the recession is all about increased sales, job creation and ultimately confidence.  Franchise business is strong as it is built on proven best practise, brand, service and recognition.  Over 90% of franchisees trade profitably according to the Nat West/British Franchise Association national franchise survey. 

If you are looking to take your future into your own hands and beat the recession via the proven franchise busienss model then now could be the perfect time to do it.

Looking back to the last recession history shows that franchise systems can grow strongly in recession. This is because as job losses and redundancies kick in many workers decide not to return to the workplace as employees. After many years of dedicated services many hardworking employees that loose their jobs decide to take their destiny into their own hands. Even in shrinking or slowing market conditions franchising offers a more secure way into business for once employed individuals.  To see options available vast www.franchises.uk.net.

Finance required

Even in these times of low credit availability the leading UK banks are keen to lend into franchise department.  This because the franchise business concept is a very secure market to lend into.  In fact according to the British Franchise Association/Nat West Franchise survey 2008 over 90% of franchisees questioned operate profitable businesses http://www.thebfa.org/bookshop.asp.  For this reason banks will still lend 50 to 70% of all capital required to start and build your franchise businesses provided you meet the banks lending criteria.  Credit ratings are now more important than ever with the banks. Franchisors should be working closely with the leading banks to ensure they can effectively support their potential new recruits in their approach to the banks for funding.

Prepare to grow