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Last Updated: Tuesday, 15 May 2007, 08:04 GMT 09:04 UK
Buying a franchise
Franchise chains offer support to novice business people
Franchise chains offer support to novice business people
The franchising model offers the opportunity to run your own business using a formula pre-tested by someone else.

The franchisee buys a franchise contract for a specified geographical territory from the franchisor.

In return for the fee, the franchisor helps set up the business, including looking for premises and stocking up, and provides appropriate training.

After the business opens the franchisor should continue to provide support, particularly in terms of marketing the product or service name, and will normally charge a monthly fee based on a percentage of sales or profit.

Support and advice

The franchisee has the chance to buy into a proven business model making the risks significantly lower than setting up from scratch.

It is important to check, however, that the particular franchise concept has been tried and tested properly.

A contribution to set up costs
Increased buying power with suppliers
Benefits of establish brand name

There is no need to be a specialist in the particular business sector, since the franchisor should supply all necessary training.

People with little business experience can also take advantage of the on-going support and advice provided by the franchisor.

The franchisee also benefits from what could be a nationally known brand name, without having to build that name first, and the cost-savings that result from the bargaining power the franchisor has with suppliers.

But remember, the reputation of your own business will be linked to the reputation of the franchisor and other franchisees, which reduces your control over your own destiny.

The franchisor also has rights (such as access to your premises) that impact on your independence.

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