Keen to get up and going quickly? There are lots of things to consider if you decide on this route, and we will help you navigate them with our resident expert. But first and foremost it is about running a business and you will still need to have your business brain up to scratch. The Police into private sector Gold package will make sense as you get started and as you grow and develop, maybe buying more than one franchise? The skills need to be there whatever the business
Have a look at [button4 url=”/?page_id=476″]Gold Membership[/button4] You will find everything you need to get you started.
This article from the Sunday Times by Elizabeth Colman on 24th July might be of interest.
Super Size? Big Macs can make a flipping fortune
The average McDonald’s restaurant in Britain turns over £1.5m a year and many make twice that. Taking on a franchise can be lucrative
Ahmed Khan started flipping burgers at 16 and now he has five restaurants (Paul Vicente)
Ahmed Khan was 16 when he began flipping burgers at McDonald’s in his home town of Southend-on-Sea. After A-levels, he didn’t bother with university. He had already set his sights on the Golden Arches.
He continued to work for the chain as a supervisor and saved hard. By the time he was 33, Khan had £60,000 — 25% of the cost of his first franchise in Cricklewood, north London. His bank put up the rest.
“Having worked for McDonald’s, I knew what someone could achieve by owning a franchise,” said Khan, 44, who now runs five outlets in Newcastle upon Tyne. “The most appealing thing is the near-guaranteed profits, and the potential to expand. My dream is to own 10 or 15 stores.”
Franchising allows aspiring bosses to take the profits from an established brand and business model, after paying a licence fee and, in some cases, rent.
Franchises generated record turnover of £12.4 billion last year, up 5% on 2009, according to a survey by the British Franchise Association and NatWest.
Nine out of ten franchises in operation for two years or more were in the black, and 72% of the newer businesses were profitable. Fewer than 4% of all franchised businesses went under last year, the survey said.
The returns can be enticing. The average McDonald’s restaurant in Britain turns over £1.5m a year and many make twice that.
There may be big initial costs, however. Buying a McDonald’s franchise costs between £125,000 and £325,000, depending on the location and size, with an additional one-off fee of £30,000.
Then there are monthly charges: rent based on sales and profitability, a service fee of 5% of sales for the use of the McDonald’s system, and a contribution to national marketing, currently 4.5% of sales.
McDonald’s imposes strict conditions. Applicants must commit to 20-year terms, whereas most franchises have an initial five-year term. There is nine months of unpaid training and operators cannot hold any other franchises.
The white-collar franchises, such as lettings agencies and printing services, also offer strong returns.
Taxassist, a franchise network that provides tax and accountancy services for small firms, projects turnover of at least £300,000 after five years. Franchisees take a third of turnover as profit.
They do not need to be qualified accountants. The cost of buying in is between £50,000 and £100,000, depending on the type of shopfront purchased, with a one-off franchise fee of £34,950 plus Vat.
Cathryn Hayes, head of franchising at HSBC, said it was important for any potential franchisee to consider the upfront costs and what support will be provided. “The key thing is, are you getting value for money? What do you pay upfront and what can you get back from that? Do your research and don’t be rushed.”
The price for a Taxassist franchise includes six months’ training in accounts, tax, practice management, pricing, sales and marketing, then unlimited access to a helpdesk of qualified accountants. Franchisees receive leads from the national marketing office, business development help and visits from the franchise development manager, a technical team and directors.
For those reluctant to make such a big investment upfront, home-based or mobile operator franchises are proving popular. Nigel Kettlewell bought a Blazes central heating franchise in September 2009, and now sells and installs solar panels too.
Kettlewell, of Bingley, West Yorkshire, continued to work as a service engineer for a year while building up the Blazes business. It is his main source of income now.
“I went with Blazes because it is one of the cheapest franchises to buy into,” the 36-year-old said. “I needed only £7,500 for the licensing fee and about the same again in working capital for marketing.
“The important thing is that I knew I was going to get excellent support. They give technical training and then come along on your first few surveys to hold your hand. They take an annual management fee but it is based on sales.”
Blazes forecasts annual turnover of £70,000 by the third year of trading for a working week of only 25 hours.
Little Kickers is another growing home-based franchise with a good track record of support. Franchisees run football classes for children up to seven, but coaching experience is not essential because initial and ongoing training is included in the upfront franchise fee of £6,500 plus Vat.
Franchisees also need about £3,000 of working capital to get started. Projected turnover is about £70,000 a year, though “many franchisees exceed this, and it varies depending on location”, Little Kickers said.
The business offers a web-based IT system for enrolments, payments and advertising, and provides health and safety and employment advice alongside general support 18 hours a day.
Banks tend to look favourably on franchise start-ups, and typically lend about 70% of the total investment, including working capital.
Tom Endean at the British Franchise Association said: “Franchising is not an instant pill for success. You need to choose carefully. However, if people have the right temperament, enthusiasm and backing to get started, then a franchise can be a strong platform for profit and growth.”