Starting an Online Franchise
Joel Caws - Technical Director, Select Your Franchise
With online shopping growing and an increasing number of people looking to the internet as their first stop for buying products and services, online franchises are part of a growth market. Even for those that don’t actually buy online, the internet is becoming a frequent place for people to carry out research before making a buying decision.
When you consider the non-geographical nature of online business along with the wide variety of products and services that lend themselves to being traded online, its clear that online franchises have a promising future.
Online franchises are potentially very attractive start up options as many can be run from home with no need for commercial office or premises, keeping overhead costs down. The flexibility that they can provide, forms another part of the attraction in that a website can be open 24 hours a day. This means your door is always open for visitors and potential customers to your site even if you leave it unattended, unlike a conventional business which requires constant staffing whilst it is open for business.
Some of the online franchises currently available are:-
- Local Directory Service Franchises
These local business directories are a great source of local information for potential consumers. The idea of this type of franchise is to market the directory to local businesses offering them online advertising exposure to the local community. - Web Design and Marketing Franchises
These are provision of web site design and marketing services usually business to business. The idea of this franchise is to provide a portfolio of website marketing options to potential buyers. Generally, very little technical expertise is required by the franchise operator as they effective sell services that are sourced and/or provided by the franchisor themselves.
Investing in an Online Franchise
As with any other business investment, its prudent to carry out your research prior to investing in an online franchise. Take time to look at your strengths and weaknesses and look at options which match your personality and the things you enjoy doing.
Finance will also be a big consideration so take time to explore funding options with your bank. The bank may also be able to provide you with some history of the franchise. Make sure you visit the franchisor to see their setup and also speak to a selection of franchisees to get on-the-ground feedback about how the franchise performs for them day-to-day.
Make sure you take legal advice as there will be legal contracts involved in the franchise startup and it pays to be properly informed and covered against any repercussions. Once you have made your choice, dedicate yourself to following the proven system and making the franchise work for you.
Franchising and Recession 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.
Tags: franchise business, Franchise Finance, franchise opportunities, joel caws, recession, why start a franchise
Recession is presenting new opportunities for franchise start-ups
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.
