Whilst owning a franchise has its own lucrative benefits, it also holds various challenges which if faced with care can help you reach the peak level quickly. One challenge many find with franchises is where you realize that you are not your own boss, but your brand is. Take, for example, if your customer wants a beer, you simply cannot serve it because he wants it if your franchise policy does not permit you to do so.

Brand standards are pervasive to every type of business, from uniforms, to how they are worn, and to what kinds of coupons you can redeem and not. You need to acknowledge your tolerance level and look for a system that truly fits in with your level of comfort.

Considering the above, if you adhere to all brand standards and franchise-prescribed processes, it will have an impact on your business. An inconsistency in franchisee could defeat the real purpose behind setting up a franchise unit, be it on from your franchise unit or someone else’s.

Secondly, it is not always healthy to rely heavily on the services of the parent company. As a franchisee, you must be aware of the services guaranteed by the franchisor and be confident about your requirements to bring your business to a success as it is not all down to the franchisor.  There can be issues regarding territorial rights that one might come across, which one often neglects to consider in the franchise agreement.

Every franchise business requires a special consideration and must be looked at with the nature of business activity involved, to give your business the best chance of being profitable.

The most favourable areas for establishing franchise business in the UK are:

• Fast food or catering or restaurant
• Retail shops
• Health saloons
• Leisure
• Computers
• Business services
• Distribution or delivery services.

However, Europe is more equipped with franchise business concentrated in retail shops when compared to franchising in the UK.

According to a recent NatWest BFA Franchise Survey, while the annual business turnover of format franchising in the UK was around 9.65 billion pounds, 695 systems existed with 33,800 franchise units in total.

The Association has introduced a set of the European Code of Ethics published under Article 3.3 for its members to follow. It states:

“In order to allow prospective Individual Franchisees to enter into any binding document with full knowledge they shall be given a copy of the present Code of Ethics as well as full and accurate written disclosure of all information material to the franchise relationship within a reasonable time prior to the execution of these binding documents.”

The European Code of Ethics does not bind the franchisees under any obligations, which on the other hand does not apply to franchisors either, as they are not members of the BFA to comply with the Code.

If the franchisee benefits from national advertising undertaken by the franchisor for the franchisee himself, the franchising business also proves advantageous to a franchisor in several ways.

For example, through franchising, a franchisor can secure a greater and quicker distribution of his products or service.
Secondly, availability of franchisees’ capital makes it easier for the franchisor to expand his network in a quicker way, which would have been a little difficult in the case of arranging for funds on his own.

Franchising facilitates a franchisor to raise the profitability of smaller units because of increased purchasing power and low overhead costs. The concept of Direct Franchising is mostly found in the UK and is only possible in the following cases:

1.    A small number of franchisees is to be recruited
2.    The franchise is simple and easy in terms of training the franchisees wherein no constant assistance is required.
3.    The home country and the host country (target country) are similar in terms of culture and geography.

The business of franchising can offer several benefits to a franchisee. Some of them are as follows:

•    Despite having no general business or management skills in hand, or no good knowledge of the proposed activity, an individual can usually make a success of a franchising business.
•    Franchisees can benefit from the name and reputation or brand which has already been created by the franchisor. This way the franchisor can take the advantage of lessened lead time that may be required to operate business efficiently.
•    A franchisee is not required to invest much of his capital into the business as there are usually financiers ready to assist franchisees on account of the proven track record of franchising, providing there is a sufficient level of investment and commitment from the franchisee as well.
•    Franchisees can easily avail finance compared to others who set up their own businesses from scratch.
•    There are lower risks of business failure for a franchisee.
•    A franchisee can utilise the purchasing power of the franchisor, as well as the size of the franchisor’s business.
•    During the franchise term period, the franchisee is provided with assistance and training by the franchisor at a continual rate.
•    In some cases, a franchisee also gets territorial protection.

A franchise business can be established in two different ways.

In the first method, a franchisor with a well-established business wishes to expand his network with the help of business format franchising.

In second case, there is a newly formed company, or maybe an existing company which does not have ample or no experience in its nature of business activity, and wants to enter into this area through business format franchising.

Of the above mentioned two methods, it is always advisable to opt for the one to run a franchise business successfully. Importantly, a business plan needs to be created that should embrace the following details:

•    Why do you want to opt for franchising?
•    Whether your products or services can be distributed through franchising?
•    What is your proposed management structure and how do you prove its soundness for a franchise business?

A franchisor is required to develop and clearly define its franchise business by starting off with a pilot operation. A pilot operation is basically a company-owned outlet, which is operated as a franchised outlet. Pilot operations generally do not prolong for more than two years and there should be ideally only one pilot operation to be conducted.

When you look at franchising, you will often see these terms, so it can help to understand what they mean.

Registered Trademarks
•    Trademarks can be attained for supplying goods and services. After obtaining the registration, the trademark owner can prevent third parties from using the same mark through claiming for damages and / or an injunction.
•    An injunction refers to a court order that prevents a third party from making the unlawful use of the owner’s trademark.
•    The only important thing to consider is not to choose a word as a trademark which describes the products or services to be supplied under that mark as it will be difficult to get the trademark

Copyright
•    A copyright is generally maintained by the author of the copyrighted work.
•    Logos or designs used on stationary items, brochures or packaging by a franchisor is subject to copyright.
•    The ownership of the copyright is managed within the franchise agreement of the two parties.

Design Rights
•    With recent changes made to the design rights in the UK, franchisors can obtain protection for their logos, products, trademarks, shop displays and packaging by attaining a registered design right.

If an individual owns an unregistered mark or name, it can prevent the third party from using his market goodwill for such mark or name.

In a franchising business, it is the reputation that plays a key role in determining the corporate identity of the franchisor in terms of the trade name, trade mark, copyright, service mark and company name.

Therefore, it becomes essential to ascertain that the franchisor is fully protected in this area. The following points should be taken into account before getting into a franchise business:

•    If the franchisor is trading a company under the name which cannot be used as a trading name for another company, a third party may incorporate a company with a similar name.
•    However, this will not stop an existing unincorporated business using the same name as its trade name from making use of a passing off action, or a trademark infringement action in favour of a registered trademark, against the company using the same name in its corporate name.

Of course, merely banking on the reputation and corporate identity of the franchiso is not sufficient, one also needs to adopt a proactive and dynamic approach. Proper market research should be conducted before you set up a franchising business. It is sometimes better to consider buying an existing franchise to gain more profits as compared to a new franchise.

The UK is recognised as one of the very few countries with few regulations on franchise business. The British Franchise Association (the BFA) has propagated self regulation upon franchise opportunities in the country, which is also considered the most sophisticated form of legislating franchising.

The direct franchising business model is mostly prevalent in the UK, the Republic of Ireland, France and Belgium, within Scandinavia, Austria and Germany. In the case of direct franchising, the potential franchisees, bankers and suppliers may not be certain about the commitment placed by the foreign franchisor.

If you are engaged in a direct franchising business or any other kind of franchising like in the retail sector, always form a core group of reliable and responsible persons to assist you in your business. They should have:

•    A good knowledge of the business
•    Basic awareness of the fundamental working principles of the franchising business
•    A good grasp of the market

One of them may be one of your family members too who is always available and can handle the business when you are away.

On their part, franchisors have a lower gearing than in a non-franchised business, and are thus able to remain stable for longer in a recession.

The health food franchising opportunities are gaining in popularity in the UK franchising market, because of the growing number of health concerns amongst the individuals and the resulting exercising and dieting habits.

In today’s health-conscious environment, people are seeking zero- or low-calorie foods and diet aids; not forgetting the ever-growing sales of vitamins, health diet foods and supplements. This should act as a further incentive to the budding entrepreneurs looking to start a health food store franchise. (more…)

Today, when it comes to managing franchise business, both men and women are compared critically for their abilities to successfully manage a franchise. However, the recent surveys by market analysts reveal that women work more diligently than men when it comes to owning and managing a franchising business with determination, which is why today women are in more demand to become franchise owners across the world.

Not only this, even the age-old observances about the thinking and operational capabilities between men and women found that women tend to possess a different style of approaching business that enables them to work in a much faster and efficient way as compared to men in the franchising sector.

Though men and women are capable enough to work effectively in the business environment, it has been found that women have extra capabilities to handle multi-tasking, or undertake several tasks simultaneously without letting any hindrances affecting the tasks and their concentrated efforts. The female brain tends to grasp different kinds of tasks in a much quicker manner than the male brain. And this is what a franchise business calls for, a good mindset and multitasking capabilities like a woman possesses, to make the business all the more profitable.