If you’ve dreamt of becoming an entrepreneur, but you’re worried that it’s going to be a bit too much to create and manage on your own, then there is another way to get up and running without having all of that risk and that’s to buy into a franchise or become an agent.
Now in simple terms, it’s a way of getting involved in a ready-made business that you can run and grow without some of the really scary stuff of that whole going alone and what that can involve.
So let’s start by talking about buying into a franchise or becoming an agent.
There are all sorts of ready-made businesses that you can become involved with. Things like coffee shops, takeaways, driving schools, cleaning companies – the list is almost endless.
Now, if you want to buy into a franchise, then most of them will require you to invest some money in the first place. This could be in buying stock, taking a territory, or maybe it’s investing in some of their training. This can range for a couple of hundred up to tens or even hundreds of thousands of pounds and if cash is tight then this could be an immediate barrier.
However, some franchises and agencies will be able to support you with some of these startup costs. They can offer financial plans or help you to prepare a business plan so that you can go and secure the investment that you might need or the debt from a bank.
Depending on the franchise or agency that you want to become a part of they will often offer you lots of support. After all, it is in their interest for you to succeed. This support can vary enormously, but it can be anything from staff training to help with marketing, cashflow planning or stock control, and all of this stuff could save you loads of money and reduce your chances of making a mistake as well as helping you to hit the ground running.
Becoming part of a franchise can also make you part of an instant business community, which is going to enable you to learn from other people who do exactly the same as what you’re trying to do.
So rather than learning from your own mistakes, you can shortcut the circuit process and learn from theirs instead.
Now, if all of this is starting to sound really appealing, then I do have to give you a bit of a balance, right?
Being part of a franchise or becoming an agent isn’t for everyone. As with most things in life, there are also some potential downsides that I want you to be considering.
So first of all, you’re often going to have to adhere to specific pricing structures. You walk into a KFC and you’ll pay the same money for that bargain bucket in Bristol or in Burnley, right? That also means that you will also be operating on fixed margins and you’ll often have to buy all of your stock from one supplier.
If you think about that fried chicken business I was just talking about, then you won’t have much or any control over what’s on your menu.
And for some entrepreneurs who hunger after running something a little bit more creative, that can often feel a little bit restrictive. But, being part of something larger does create what’s called economies of scale.
If you set up an independent fried chicken shop, you won’t be able to buy stock and raw materials at the same scale as a national franchise with 500 branches. So being independent can mean that your costs will be higher.
Now, of course, whether all these savings of both buying get passed on to you, the franchise holder is another question, but generally speaking, there is going to be safety in numbers when it comes to buying stock and negotiating supply contracts.
The other thing to bear in mind is that being part of a franchise will also probably mean that you’ll have to adhere to certain rules and standards that are set by the brand.
This can range from making staff wear corporate uniforms to using certain equipment, having set opening hours or even furnishing your shop with specific furniture, all of which you’ll probably need to buy from the franchise and it can be really expensive.
But, all of this can have a potential upside because you reduce the usual process of trial and error, trying to develop your own policies, retail environment, price and structure, the list goes on.
Now there is one more benefit that I wanna talk about and I’ve left this one to last because it is a real biggie. And that is when we talk about the brand.
Now most entrepreneurs will tell you that building a brand from scratch can be one of the biggest challenges in business. So the idea of being part of an established and possibly well respected brand from day one can be massively appealing. In fact, it could just be the turbocharged start to your career as an entrepreneur that you would always dream of. So to sum it all up.
I know loads of people who have bought franchises and become sales agents for established brands and I can tell you that some of them are really super successful. The question I want you to think about is do the benefits outweigh the downsides? Only you can answer that depending on how you feel about business.
Do you want to start a business from scratch? Do you want to build a business from the ground up, learn through your mistakes, but also enjoy the sense of satisfaction that you get when your gut feels like it’s paid off?
Or on the other hand, do you want to step into an established business, a proven business framework that can support you, train you, even help fund you, but which may limit your creativity and might come with fixed costs and one that you’ve got little control over?
That my friend, is the million dollar question that only you can answer!
So, becoming part of a franchise or becoming an agent is not for everyone, but for many people, it offers them the opportunity to become the entrepreneur that they want to be without some of the risks that until now might have been putting them off.
Now, if you’ve been involved in a franchise or if you’re an agent for an established brand, I would love to hear about your experiences, good, bad and ugly. So if that’s you, please let us know in the comments and then tell us your story so we can all learn from it.
Thank you so much for watching and have a great week. I’ll see you next time!