In choosing whether a franchise or franchise opportunity is the right business decision it is worth considering just how the franchise market is structured. Here in the UK the idea of a franchise for sale somehow has less kudos than an opportunity to invest in a privately owned business.
There is a level of sophistication in the Franchise market that generally is not understood. A couple of hours investigating the variety of business opportunities available identifies that the market is segmented into a number of different offers. In a sector that is reputedly worth ?10bn and employs 360,000 the complexity should not be misjudged.
At the top of the market the larger well know high street brands such as McDonalds (probably the most well known franchise operation) offer an extremely successful business model and brand. A Franchise Opportunity with these types of market leaders is not for the faint hearted, a significant personal investment will be required, extensive training and exposure to the companies established brand and behaviours are mandatory. In return for the considerable financial and professional commitment the company model is rock solid and the business and marketing plans should be well recognised and easily put into practice.
Of course with such a heavy investment and comparatively low risk, returns are likely to be less than other opportunities.
The second tier offers less investment, the opportunity to be flexible within the defined product or service and normally lower investment. These opportunities are unlikely to be well know high street brands but may occupy the secondary pitches in the central business district or even we see some internet businesses falling into this category. As with the top category there will be an established brand and proposition to be adopted but there may be opportunity for a little “self–expression” as the profile of the firm is likely to be lower and the market may well be regional in nature. Franchises like Monkey Music and 0800 Handyman would fall into this category, they are very successful franchises in their own rights but not greatly visible on the high street.
The final category is that of start-up franchises which offer the potential entrepreneur the opportunity to get in at the ground floor. These business ideas when offered as a Franchise For Sale are the innovative business plans that do carry a higher level of risk, in that the sales proposal, and even the management of the holding company may be not yet fully organised. The infrastructure will be in place of course but the firms are likely to be quite new. Depending on the franchisee’s approach to business these cheaper opportunities may well be the most attractive as they do allow for a certain amount of development and flexibility, some will even openly encourage the brand development from within the membership. If you’re looking for an opportunity to form the franchise then getting in at the cheaper end of the market may well be a good move.
fundamentally the franchise market is many layered, complex and offers a number of opportunities dependant on the investors available capital, attitude to risk and medium to long term aims.
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