What is a franchise?
A franchisee is a self-employed business owner who runs a business using the brand and systems of an established company, known as the franchisor.
Business franchising is an arrangement where the franchiser grants the franchisee the right to use its trademark or trade-name as well as certain business systems and processes.
Why choose franchising?
One of the main reasons entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or cost of equity. Buying a franchise can be a quick way to set up your own business without starting it from scratch.
“FRANCHISE BUSINESSES CAN ACHIEVE RAPID GROWTH AT LESS RISK”
Other benefits of franchising are…
1) Fewer responsibilities and commitments. In a franchised unit the franchisee will take complete control and responsibility for the legislative requirements regarding PAYE and NI, Health and Safety, Trading Standards and Employment Legislation. However, you will need to take on some responsibilities such as recruiting and training new franchisees.
2) Franchisee Marketing Fund. Just imagine how much your business would need to spend on marketing to gain a national profile…
With a franchised business, the costs associated with marketing are covered by the franchised network.
Not only will you be able to expand nationally without the extortionate cost, but you will also benefit from the kudos of a recognised brand name.
3) Easier to finance the business. Banks are more likely to lend money to buy a franchise with a good reputation.
4) Supplier relationships. Good relationships with suppliers will have already been established, saving you a lot of time when getting your business started.
How to be a successful franchise
To be a successful franchise, a business needs:
- Demonstration of success- Take advantage of every demonstration or training opportunity.
- Clear systems & procedures- by following the systems you preserve the brand and protect your investment and that of your fellow franchisees.
- Sufficient recurring profit levels.
- An enthusiastic franchisee- the enthusiasm brings a level of excitement and energy to the operation that everyone can feel, including your customers and any staff
- Low skill levels for operation i.e. something that can be easily taught.
- A distinct brand – branding improves recognition, helps build financial value and improves customer loyalty.
Accountancy support within the franchise model
Accountancy support integrated into a franchise model can have a massive impact on the growth of the overall franchise and the success of individual franchisees. Here at UHY we understand that working for yourself doesn’t mean 9-5 hours. We can offer advice from our experts who are passionate in helping you grow.
Support throughout the whole life cycle – Franchisor
- Feasibility study – is the business suitable for franchising?
A feasibility study must be carried out to assess the potential success of the business as a franchise. A number of factors will be considered such as current and emerging competitors, business conditions, consumer demands, and legal and licensing requirements needed for conducting business.
- Support on franchise development plan
A detailed development plan which outlines what you want to achieve and how you’re going to do it is essential to any franchise. Any plans must take into account both the franchisor and franchisee.
- Sales & on-boarding support
Selling new franchises and attracting the right interest is vital to any successful franchise. From the beginning you must have a defined onboarding process which ensures potential franchisees understand the franchise’s goals, values and culture.
- Funding support
Setting up a franchise requires a large amount of funding, including the initial franchise fee, purchasing stock and setting up the sites, along with everyday operational costs.
- Accountancy and taxation
Like any successful business, a franchise should keep records, produce valuable reports, and prepare taxes, along with giving valuable financial management advice. Assistance on the day-to-day accounts and taxation helps to keep every franchise ticking over.
- Training and development
It’s vital that a franchisor properly trains its franchisees to ensure consistency in its systems, processes and brand values. Training and development is the beating heart of any franchise and helps ensure a high standard of operating is upheld throughout the business.
- Management data reporting
Thorough data reporting from the management side of any franchise can be integral to improving the performance of an individual franchisee. Any information on where a franchisee is struggling and where they are doing well can help to monitor the individual progress of each business.
- International franchising
International franchising is a positive way to upscale a business and reduce the reliance on domestic demand. It is a fantastic way to extend a brand globally and increase the number of revenue points feeding into the main franchise.
- Business valuation and sale
Valuing a franchise for resale is often a difficult task. It is usually based on the potential future earnings of a franchise and any future risk associated with the market. We help to guide you through every step of the way to ensure a smooth transition.
Support through whole life cycle – Franchisee
- Help choosing the right franchise
A potential franchisee must first ask what they want from their business and how they would like to operate. Generally, the most successful franchises avoid markets which are either too crowded or too thinly populated.
- Funding support
There are many options available for helping to fund a franchise and we can advise on what is best suited to your unique goals.
- Accountancy and taxation
Keeping on top of the day-to-day accounts and taxation side of a business is the key to success. It allows you to focus on the important stuff with none of the hassle.
- Training and development
Correctly training and developing staff on the franchise’s systems and processes is a necessary step which will always reap benefits further down the line. The company manual acts a training guide which should be adhered to in order to maintain consistency across the brand.
- Growth advisors – Support to achieve goals (e.g. help you obtain multiple units)
Growth advisors give you the helping hand to make your business thrive. They offer support across every element of your franchise, designed to guide you in the right direction.
- Exit strategies
When the time comes to sell, it’s important to consider all the options available and planning how you would like to leave the business, whether that is to family, an outsider or an employee.
Benefits to Franchisor
- Continuity – Compliant accountant who knows the industry
- UHY’s National and International network
- Detailed real-time performance of each franchisee reported back. This allows the franchisor to provide support and advice where needed
- Bespoke management reports and alerts
- Training on systems, taxation and any legislation changes
- Integrated on-boarding process to ensure businesses are incorporated/ VAT registration is applied for, etc. in an efficient and easy way. Should add professionalism to bringing on new franchisees
- Support with franchise funding
- Support with feasibility studies and plans
- Franchise valuations
Benefits to franchisee
- Continuity – Compliant accountant who knows the industry (benefits of UHY)
- Agreed fee based on our knowledge of the business
- Industry-leading accounting software to save time and maximise profits
- Training for both the franchisee and employers
- Tax experts
- Growth support to achieve goals
The Next Step
At UHY Hacker Young in Manchester, we work alongside both franchisors and franchisees to ensure that every necessary step of running the business is taken care.
For more information about the services we offer our clients in the franchising sector, please contact one of our specialist advisers.