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Thinking of running a business but wary of the risks involved in starting it up independently? Franchising could be the right option for you, as it offers you the opportunity to work with an established concept instead of coming up with your own business idea. You will be able to take advantage of a tried and tested area by working with an already recognised brand name. Your level of control in running the business will be limited to certain degree. For instance, you will own and operate your own outlet, however your franchisor will retain control over how the products and services are sold. If you have a personal interest in a particular area of business, franchising is an exciting way of making your dream happen.

Franchising explained in more detail

Franchising is when the owner of the business (the Franchisor) grants a licence to another person or business (the Franchisee) to use their business idea. In the agreement the licence will be for a fixed duration of time, and will give the franchisee permission to use the franchisor’s name, product, service and association. Therefore you will be making a connection with a recognised brand name, and working to make a return on your investment, using the franchisor’s products and services. The franchisor will already have a successful system in place, and you will be working by the rules of this system.

The advantages associated with Franchising

There are numerous advantages of buying a franchise. They include:

As you will not be starting up a business from scratch, there will be less risk involved. This is highly advantageous as you will be working with an already proven idea, and can learn from the other franchises that are doing well too

Customers prefer the security and comfort of dealing with a well known brand. Therefore you will not have to stress about the unknown territory associated with a business started up from scratch.

You will be likely to benefit from the training and support the franchisor will offer you. This will usually include support in setting up the business, instructions on telling you how to run the business, and on-going advice and support

The banks will be more helpful towards assisting you financially as they will be aware that you will be operating a franchise with a good reputation

Whilst there are many positives associated with franchising, there are also some drawbacks. It is up to you to assess the weighting of each before you reach your final decision:

You will not have complete control in running the business. Therefore you will have to be content with following some rules and regulations, and be able to adhere to certain restrictions

The costs involved in running the franchise may be higher than you expect. There will be on-going management fees and you have to buy products from the franchiser

No matter how successful the franchise as a whole has been doing, there is always an element of risk that it may go out of business

The level of support and training you will receive will vary from business to business. Not every type of franchise will offer the same amount. It will be up to you to investigate this further before you decide to operate the franchise

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