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5 franchising myths exposed
Most people in the UK will have used services from a franchise at least once in their lifetime. Franchises constitute an important lifeblood for the UK’s economy, as major chains contribute billions of pounds in revenue and provide jobs for thousands of people.
For most people though, what franchises are and how they work can be clouded by false myths.
1. Franchises and chains are two separate things
Many people incorrectly assume that chains and franchises are the same things. Chain stores are owned by a single company or brand, whereas franchises are owned by individuals. Chain stores are usually managed from a central HQ, whereas franchises are run locally by franchisees, which makes them integrated into the local communities that they are located in.
2. Only fast food and retail franchises exist
Despite most large and well-known franchises being fast food and shopping brands, there exists a multitude of franchises operating in nearly every different business sector. These vast possibilities allow people massive choice when it comes to purchasing a franchise, as they can start a franchise that may be more suited to their skills and abilities.
3. Owning a franchise is for couples and cash-rich retirement age workers only
The typical owners of franchises are perceived by many people to be married couples in their mid to late 30’s, who after spending many years of working for other people, decide to buy a franchise and work for themselves. Or cash-rich individuals nearing retirement age, who decide to invest in a franchise. Both of these assumptions are wrong, as franchise owners come from all age groups and demographic types. Becoming a franchise owner is open to everyone. Research from the BFA and Natwest showed that 18% of all franchisees are now under 30, with 52% of these being female.
4. People who own a franchise aren't entrepreneurs
Some franchise brands require franchisees to follow rigorous procedures and systems and provide no opportunities for innovation or differentiation. This creates the viewpoint that franchise owners are not true business owners and are instead forced to comply verbatim with orders from their parent brand. Whilst this may be true for some turnkey franchises, in essence, franchise owners are entrepreneurs, as they invest their time and money into a business that is theirs and which carries risk and reward.
5. Buying a franchise is expensive
Like the variety that exists in franchise business types, the costs of buying a franchise can vary considerably. Whilst some major franchises may cost upwards of £1,000,000 to buy, other franchises can be bought for less than £10,000.
Buying a franchise isn’t only limited to people with access to five or six figures of cash at hand. Several leading banks provide loan facilities to entrepreneurs looking to start a franchise, in addition to there being local business grants and finance vehicles available to aspiring franchise owners.