Types of Franchise Business
When selecting a franchise you need to be clear about exactly what it is you are being offered and what form of franchise it is. There are three types of franchise:
Job Franchise - effectively you are purchasing a job for yourself. The capital investment required will usually range from £5,000 up to £20,000 and these franchises take the form of single-person businesses. Examples include mobile car mechanics and domestic carpet or fabric cleaners.
Business Franchise - these involve the purchase of a complete business that will require additional staff over and above your own involvement. Prices for this type of franchise range from £20,000 to £100,000. Examples include fast food operations and printing shops.
Investment Franchise - at the top of the scale and usually involving a substantial investment in excess of £100,000 with some costing as much as £1m As would be expected, there are few franchises in this price range. Examples include hotels and restaurants. The vast majority of the franchise investment cost in these cases will be for the property and equipment required.
From the above you will see that it is easy to establish exactly what type of franchise you are being offered. What is sometimes more difficult to establish is exactly what you are being offered as part of the deal. Taking the case of a mobile mechanic, does the franchise fee include a customised vehicle and all equipment? Understanding what you get for your money is extremely important.
Being on your Guard
You need to be aware that some so-called franchisors are not actually offering a franchise at all. As with all aspects of business, there are potential fraudsters in the market and you need to be on your guard. Before you make any initial decisions on a prospective franchise you must always obtain references. You should also contact the British Franchise Association to establish whether the franchise you are considering are members. If they are not then you need to ask why not and whether they intend applying in due course. The decision will, of course, rest with you but wide research is required before you make a final choice.
