Franchising - Some Facts and Frequently Asked Questions
Some of you may know a great deal about franchising, some will know a little and you may be someone who knows nothing at all or worse, has negative thoughts about it due to previous
mis-information. Whatever category you fall into we thought that the following information and questions may help you in your decision making process.
The Facts about Franchising in the UK
The information listed below is taken from the latest NatWest/British Franchise Association survey into franchising which provides the most comprehensive data available about the sector.
- Franchised businesses contribute £17.2 billion annually to the UK economy
- Over 900 separate ‘franchise systems’ are operating nationally
- These trade from over 48,000 units including, offices, retail premises, vehicles and private homes
- In excess of 710,000 people rely on franchising for their income
The above facts may be interesting but do they give you reasons to buy a franchise? Well maybe not. However the survey highlighted the following three facts which add weight to the argument
that you should seriously consider becoming a franchisee;
- 93% of franchised businesses reported profitability
- The percentage of franchised businesses that suffer commercial failure is 0.9% vastly lower than the figure for the non franchised sector.
- The major High Street Banks (and many other funders) are supportive of franchised businesses and are prepared to lend around 50% of the required capital in order to help you get your business up and running.
What exactly is a Franchise?
The term ‘Franchise’ is associated with a number of business models from rail franchises to film franchises. Instant Cleaning is classified as a Business Format Franchise. This means that, as
the franchisee, you own 100% of the business.
As your franchisor we will grant you the rights to trade in an exclusive territory, where you will be the only Instant Cleaning Franchisee operating, under a five year licence, with two automatic renewal rights.
In return you will agree to trade under our brand name, utilise the business format, operating structures and methods that have made us successful and pay us an initial joining fee and monthly fees which we will explain in detail later in this document.
Why don’t I just start my own Cleaning Business?
You could of course decide to do just that. Many people have started up on their own and many have failed (around 50% of stand-alone start ups fail within 5 years). Compare this figure to the success rate of franchised businesses as shown in the NatWest/bfa Survey
and you will see why a franchise model represents a much lower risk for you and your money.
When buying an Instant Cleaning Franchise you are replicating a business model that we have already proved works. Have we made mistakes along the way? Well yes of course, but you won’t make those same mistakes. Our training and support will make sure of that.
You will have access to our dedicated booking and management systems, cleaning methods, website and the marketing techniques that have helped us to grow. Starting a business on your own is tough and challenging. As an Instant Cleaning franchisee we will always
be there to provide help, support and guidance when needed.
Are you the ‘part owner’ of my business?
As we said above 100% of the business belongs to you. Our fees are based on a percentage of your turnover and once your usual ongoing overheads are deducted you keep all of the business profits. Successful franchisees should look to grow their businesses, create
attractive incomes for themselves and at some point in the future, achieve a profitable exit strategy by selling their franchise with our approval.
You take most of my income don’t you?
This is another common misconception. Our initial fee covers your Licence to trade under our name and systems and whilst it is paid upfront it averages out at just over £12.00 per week assuming you renew your franchise for the additional terms. The rest of the upfront
fee is accounted for by the launch package and training that we will give to you. In terms of ongoing fees 8p from every £1.00 that you turnover comes to us in the form of a management fee. An additional 1p per £1.00 will be charged as a marketing fee but we must spend this
purely on marketing the Instant Cleaning brand which benefits your business. All franchised businesses have to work financially for both the franchisee and the franchisor or else the whole business model would fail.
What if I need funding to get started?
Banks, as we have previously mentioned, are particularly willing to lend to franchised businesses. Typically they will lend around 50% of the required capital which would include the initial amount to purchase the franchise plus required working capital. As well as the major High
Street Banks we have excellent relationships with alternate funding sources all of whom are supportive to franchised businesses.