Taking the Plunge

Franchising is a lot less risky than starting a new business from stratch. And with the economy slowing down, more and more people are looking at franchising. This bodes well for my franchise consultancy business.

Take the plunge by going for a franchise

Andrew Stone, The Sunday Times, September 7, 2008

It's easier to get started in business if you are working with an established brand

While taking a break from her career as a human-resources manager to have her first child, Gabrielle Lixton spotted a business opportunity in the swimming classes she attended with her baby.

Water Babies, the company running the classes, had just started selling franchises and Lixton jumped at the chance to buy one in Berkshire, her local area.

"I had been thinking about whether to go back into corporate life or whether to run a business of my own. Water Babies seemed like a tried-and-tested business, so I spoke to the franchise owners and was really impressed by them. I decided to buy one."

Within two and half years she had grown the business by more than five times, bought a second franchise in Oxford and sold her first one for 15 times what she paid for it.

Buying a franchise offered Lixton the chance to run her own business but with less risk than starting from scratch on her own. "The advantage of buying a good franchise is that you get help with things like marketing, human resources, PR and health-and-safety matters. Water Babies offered me a complete system and loads of support, and that let me concentrate on growing the business," she said.

Franchising is continuing to grow in popularity because it offers budding entrepreneurs a proved concept and a business that can be grown rapidly with less risk than starting up on your own, according to the British Franchise Association (BFA).

As the economy slows, interest in franchise businesses is increasing, according to Tom Endean of the BFA. "We asked our members how they were doing as the economy slows and they reported more enquiries than ever from prospective franchisees.

"Whether people are taking redundancy or making a career change and thinking about starting their own business, franchising is a safer option than going it alone. The survival rate of franchises is much higher than other start-ups and this makes it easier to secure finance from banks."

The turnover of franchise businesses grew 15% last year and they are likely to grow healthily even if the economy slides into recession, said Endean.

"Franchising is a proven model now, combining the best of motivated local businesses with the back-up and cost savings offered by a large company."

Even big business is using the franchise model. Leading brands are using it to expand all over the world, offering substantial opportunities to local business people.

Hilton is one group that is using franchises to expand as it introduces two American brands -- Hampton and Doubletree -- into Europe as part of a plan to double its number of hotels over the next decade.