Entrepreneurs are driven by ambition and the desire to build a successful venture. If you’re just starting out or looking for a new business opportunity, you face an important decision: should you join an established franchise or build an independent company of your own?
Here’s how franchising works, the key pros and cons and how to find franchising opportunities near you.
What is franchising?
Franchising is a business model that allows an individual (the franchisee) to own and operate an existing business in their local market, using the brand, processes and support of an established company (the franchisor).
It’s an opportunity to combine your passion with a proven business model. With an established brand, expertise and resources, support systems and a roadmap to profitability, entrepreneurs have a head start – meaning you can focus on growth while minimising the risks associated with starting from scratch.
How does franchising work?
In a franchise agreement, the franchisee pays an initial fee and ongoing royalties to the franchisor. In return, they receive the right to use the franchisor’s brand name, business model and other support services like marketing, training and operational systems. There are several types of franchises, including product distribution franchises, manufacturing franchises and business-format franchises.
Is franchising right for you?
Now we’ve covered what franchising means, it’s time to decide if it’s the right choice for you, as there are many benefits of both franchising and independent ownership to consider. Let’s explore the pros and cons…
Benefits of franchising
“In business for yourself – not by yourself!” – The British Franchise Association (BFA)
Franchising is undoubtedly a popular route – did you know that McDonalds, Subway, Starbucks, SPAR, IKEA and Travelodge are all franchises?
Franchising offers an array of benefits, especially for those who want to start a business but are hesitant about going it alone. The beauty of this method of business ownership is that it provides entrepreneurs with a well-established, proven model, giving you large amounts of security. You can avoid many of the risks and trial-and-error that independent business owners often face.
And the proof is in the pudding: the 2018 BFA NatWest Franchise Survey showed that the franchising industry contributes £17.2 billion per annum to UK GDP, employing 710,000 people, with 93% of franchisees claiming profitability and less than 1% of franchisors closing per year due to commercial failure.
Here are some other advantages of franchising:
- Access to financing – Banks and other financial institutions tend to view franchises as lower-risk investments compared to independent start-ups.
- Grow your own way – A tested and proven model also means potential to grow multiple locations quickly.
- Brand recognition – You can leverage an established brand name from day one.
- Training and support – Be guided through every aspect of business operations, from recruitment to safeguarding. This is particularly important for entrepreneurs looking to work in the childcare sector.
- Marketing and advertising – Franchisors typically handle large-scale national or regional marketing campaigns.
Disadvantages of franchising
Franchising isn’t for everyone, and some people prefer to do it solo. Here are some of the potential cons of franchising:
- Less autonomy – Franchisees must follow the rules and guidelines set by the franchisor, while independent owners have full control over operations.
- Restricted innovation – Franchise agreements limit the ability to introduce new products, services or marketing strategies without approval.
- Brand reputation dependency – A franchisee’s success is tied to the brand’s reputation and how other locations are performing.
Why franchising is ideal for the childcare sector
As a national nursery franchise, it would be remiss of us not to touch on the childcare sector. The sector is one of the fastest-growing industries globally, driven by increasing demand for quality early childhood education and care services.
Franchise opportunities have become a natural fit for this thriving sector due to several key factors, including trust and reputation of an established brand as well as having structured operations and clear support and guidance. The franchise model provides standardised procedures, education and safety protocols.
On the flip side, independent owners have more flexibility to set policies for things like staff training, opening hours and childcare fees.
Ready to take the next step?
In conclusion, franchising can be the perfect stepping stone to achieving your dreams of business ownership. In sectors like childcare, where trust, quality and consistency are essential, franchising offers a distinct advantage. Investing in a childcare franchise allows entrepreneurs to make a difference in their community while building a thriving, stable business that quickly meets the needs of its customers.
At Banana Moon, our proven business model gives franchisees a secure and trusted experience every step of the journey and continues to support them daily. Our ever-growing network is a testament to the success of the model and our family ethos runs throughout them all. We’re proud to be BFA Established members, the highest membership available with the BFA.
If you’re interested in exploring franchising or would like to enquire about joining our business-leading franchise, contact us today!
