Franchising could be the ideal way to expand your business without investing large sums of capital, although to set up the franchise operation effectively, investment will be needed. Franchising will also allow you to retain control over your products or services, and the way they are marketed.

However, franchising is not the path to salvation for an ailing business as it may be some years before positive cash flow and worthwhile profits are achieved. These pages give you a brief overview of some of the aspects to consider when expanding through franchising. For more details you can send for our information pack.

Franchising is a joint venture between an independent third party (the franchisee) and a business (the franchisor) wishing to expand its activities. Usually, all aspects of the franchisee's business are strictly controlled including image, products or service, systems and administration. This method is usually known as 'business format franchising'.

As a franchisor you will:

• allow franchisees to use your trading names, logos, business style and format
• help franchisees to establish their own businesses to a pre-determined format and provide continuing support to allow them to operate their businesses successfully.

You can only become a successful franchisor if you are already operating a successful business with a good track record, and have sufficient resources to develop and support a franchise network.

Developing your franchise operation can mean substantial capital outlay. However, when you appoint franchisees they will pay you initial fees, which will reimburse a proportion of your costs. Once they are up and running, you will receive a regular income from each franchisee through charging a management service fee and/or by marking-up the price of goods supplied.

Running a successful franchise network requires careful planning, continuous monitoring and advice and support from professionals such as an independent franchise consultant, an accountant and a specialist franchise lawyer - and, of course, the support of your bank manager.

Important Notice for Franchising