Being a follower rather than leader can work for many

There’s a certain snobbery about entrepreneurship. Start up on your own, with your own invention or life-changing idea, work from your garage, make millions, and you’re revered.
Start up your own business, with a goal to improve someone else’s product or idea, get some investment, make millions, then you’ve done well. Buy a franchise, follow someone else’s plan, processes and policies, take less of a risk, make millions, and hey, you took the easy route.

But that perception of franchising is not fair. When we’re talking about regenerating the economy, encouraging people to work for themselves, start new businesses, scale and grow, then surely franchising – which is often less risky, and a tried and tested model – is a safer way to embark on an entrepreneurial journey?

Franchising is on the increase. At the height of the recession, the sector’s turnover actually increased to £11.8 billion – with 94 per cent of franchisors stating they were optimistic about the future.

According to a survey by NatWest and the British Franchise Association, nine out of 10 franchises remained profitable during the recession. This is one of the main reasons why Royal Bank of Scotland and NatWest launched a Franchise Fund, in a bid to kickstart growth and create jobs.The fund – £100 million of loans, with discounted fees – could finance up to 1,800 additional franchise businesses and 24,000 new jobs.

RBS says the industry has shown itself to be virtually recession-proof and for the many people left out of work by the recession, franchising is a great way to start up a business.

Carolyn Donaldson launched Contempo Lettings in 2007. She currently has five franchises, four in Glasgow and one in Aberdeen, but has announced aggressive expansion plans to set up 30 more over the course of the next three years.

Managing Director Donaldson is targeting Edinburgh, Dundee, Stirling, Perth and Inverness, not just to meet the rising need for rented property but as an alternative for people losing their jobs to start their own business.

She says now is the time for franchisors and franchisees to capitalise on the recession and give in to that burning ambition to run their own business.

“There’s a huge opportunity for me right now,” says Donaldson. “So many quality individuals in the property market have been made redundant or are looking for a safe exit route. There are people out there used to earning £60,000 a year or more but there are no jobs available at that level any more. These people have a lot to offer, great contacts and skills that will stand them in good stead to run a franchise.”

Gary Mitchell is a former surveyor turned estate agent who bought into Contempo following the credit crunch and the downturn of the market.

Coming from a family business background, Mitchell knew he wanted to do the same but focused on gaining industry experience before undertaking his own venture. He believes franchising is a safer option: the support and advice from both the franchisor and fellow franchisees has made a big difference to his ability to be profitable.
Being part of a franchise network also means you are likely to avoid costly mistakes, because the processes have already been proven, says Mitchell.

You can similarly benefit from group discounts from suppliers and a sense of community within the network, which helps eliminate the isolation that many new business owners experience, he adds.

It might be a safer route to running your own business, but with the average cost of opening a franchise said to be £46,700 it’s certainly not the cheapest.

The average turnover for a franchised business is £353,000 and with one in five franchisees operating multiple units, there’s a clear opportunity to build a business of scale.

So maybe it’s time to stop turning our entrepreneurial noses up at franchisees and franchisors and view the market more favourably. After all, it’s one of very few actually enjoying growth right now

1 Comment on Being a follower rather than leader can work for many

  1. Good points, well made. Franchising definately is an option particularly for those less experienced in running a business – it is not all about the key offering and a franchise helps with all the support, marketing, admin functions. I DO always advise my clients to do their homework though – evena a franchise business has to inspire the entrepreneur enough to get through the harder days and not is not simply a prefabricated, flat-packed success in a box.

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