Franchising grows brands faster
Chartered Accountants Wylie & Bisset is advising business owners who prioritise speed of brand growth over the need to own all assets and future profits outright to consider franchising as an expansion model.
According to the recent British Franchise Association (BFA) and Natwest January 2019 report, businesses that operated under a franchise license contributed more than £17bn to the UK economy last year.
And according to Catherine Livingstone, director at Wylie & Bisset, for those entrepreneurs seeking to expand a business with an operating prototype which can be readily duplicated, provided they have a robust financial record and a credible brand, then franchising offers a range of attractions.
“Franchising offers business owners the potential to roll out a business format sold for a regular fee to independent operators by developing a business with the additional input of franchisee capital, thereby increasing the opportunities for rapid expansion,” she said.
“Franchising also offers the potential to reduce overheads and staff costs while gaining buying power and presence in new locations and overseas markets.”
Livingstone cautions that franchising will not necessarily work for niche businesses heavily reliant on customer relationships based within a certain geography with its own characteristics which could not be easily replicated elsewhere.
“Franchising works best for those businesses with an established brand that customers recognise and associate with quality goods and services that have the potential to be rolled out across a number of locations,” she said.
“I would advise any business owner considering franchising to ensure that they have a clear idea of the financial and time commitments required, then develop a business plan showing what their projections are, what investment is required and what income they anticipate receiving in return.