Why franchising could be the right option for you

It can represent an efficient way to quickly grow an existing business – or a low risk way of becoming your own boss. Franchising is growing rapidly in the UK, with good reason.

The UK economy has changed dramatically in recent years. As job stability and certainty has decreased, there has been a growing number of people working for themselves. This has also driven an exponential growth in the business franchising sector.

For the uninitiated, a business franchise represents a contractual relationship whereby an existing company will allow individuals to use its brand and method of doing business while supporting it in various ways (marketing, suppliers and back office systems, for example) in return for an upfront fee and/or a cut of profits.

For existing business, this can represent a fantastic way of growing quickly and without the heavily investment required if a business was to open more operations/premises off its own bat (and cashflow). A network of branches can be quickly established, each managed owned by an individual but supported by a head office.

In the UK, legitimate franchises are approved by the British Franchise Association – giving franchisors advice on creating the right structure and franchisees the reassurance they are buying into a legitimate business.

For individuals, this can be an excellent way of owning a business without the risks inherent in starting something from scratch. Although an upfront investment is usually required, you get the benefit of an established brand, guidance and support.

Many of the UK’s biggest brands operate using this business model including Subway, Costa, McDonald’s and the Marks & Spencer foot outlets. Even Coyote Ugly Saloon, the newest addition to Swansea’s nightlife, is a franchise.

And more are appearing every day. The sector has enjoyed phenomenal growth in the past 10 years with the number of people employed by the sector increasing by 70 per cent in the ten years between 2006 and 2016. It is estimated that some 45,000 franchises are operating in the UK, employing more than 600,000 people and contributing more than £15 billion to the UK economy annually.

In Wales, there are some excellent examples of franchisees who have made a success of this business model. Almost every McDonald’s west of Bridgend for instance, is owned by Ron Mounsey – a former dairy farmer who saw the potential of the McDonald’s franchise early on. His group now has a turnover of more than £40 million, showing what is possible in this sector.

But it is critical that both franchisors and franchisees get the correct advice when embarking on this journey.

Law firm Hutchinson Thomas, with offices in Swansea and Neath, is the only firm in South West Wales accredited by the British Franchise Association to offer such advice. Its staff have completed a rigorous approval process to secure this recommendation.

Darren Davies, head of the Franchise Law team at Hutchinson Thomas, says he is seeing rapid growth in this sector. But while it boasts many opportunities, it is critical to get the best advice.

“This sector has enjoyed incredible growth in the past decade and we are very proud to be one of only a very small number of firms in the UK to be accredited by the British Franchise Association to act in this field,” Davies says.

“We would encourage business owners and aspiring entrepreneurs alike to consider this option but it is also important to understand exactly what you are getting yourself into and get the legal side of things correct from the start.”

For expert legal advice about becoming a franchisee and building up your own business – contact Darren on 01639 640162 or email: darren.davies@hutchinsonthomas.com