Buying a franchise can be a great path to business ownership, allowing you the everyday freedom of being your own boss without the risks of going it alone.
We outline the practicalities of buying a franchise to help you decide if it's right for you.
What is a Franchise?
First up, the basics – what is it you’re actually buying?
A franchise is a business that is granted permission by an established brand to operate under its name, trademarks, products and operational models.
Franchisees own and run individual units while adhering to the guidelines set out by the franchisor. The franchisee benefits from the brand recognition and power of a proven business model in exchange for paying franchise and royalty fees.
What Does Buying a Franchise Mean?
Buying a franchise involves paying an initial up-front franchise fee to gain access to your chosen brand's trademarks, systems and products and start operating under its name. Before final purchase, you will have to sign a franchise agreement that outlines the responsibilities and expectations of both you and the franchisor.
When you buy a franchise, you own the individual business. While you still have to follow the rules set out by the franchise agreement, you will get to make everyday decisions and enjoy the perks of being your own boss.
Another key aspect to consider is the payment of royalty fees. This fee, usually a percentage of gross sales, ensures you can keep operating under the brand’s image and get access to ongoing support and marketing materials provided by the franchisor.
How Much Does it Cost to Buy a Franchise?
Investment level is likely one of your primary concerns if you’re seriously considering buying a franchise. How much a franchise costs will usually depend on the industry (i.e. retail or service), the reputation of the brand (well-known brands will likely cost more) and the size of the franchise.
According to the Quality Franchise Association, the average cost of a UK franchise is around £40,000. While there will be plenty of low-cost franchises much cheaper than this, as well as high-end franchises that require more investment, this gives a good general idea of how much you need to be prepared to invest.
To see a more detailed breakdown, head over to our full guide on how much a franchise costs.
Can I Buy a Franchise?
While you don’t necessarily need a specific qualification to buy a franchise, you will need to meet the personal and financial requirements outlined by the franchisor.
Franchisors that accept your application without much vetting or follow-up are likely too good to be true, so make sure you do your due diligence and are confident your chosen franchisor is reputable and not promising unrealistic returns.
What to Consider When Buying a Franchise
Buying a franchise is one of the final steps in a long journey of research, careful consideration and self-evaluation. Key areas to consider include:
Franchise Research
You should spend a bit of time familiarising yourself with the franchise business model and how it works, as well as the kind of franchises available – if you’re here, you’re already on the right track!
Then you can narrow down the industry and niche you want to work within. Once you’ve got your shortlist of franchisors, do more in-depth research about the companies and their specific offerings.
Finances
You’ll need a good understanding of the cost breakdown of your chosen franchise. This will include how much initial investment and working capital you’ll need, as well as any ongoing payments.
Understanding your options when it comes to financing is also important at this stage, as you can start to form a basic idea about the practicalities and potential next steps involved.
Self Assessment
You will also need to be realistic with yourself. Is franchise investment genuinely the right move for you? Consider whether you have the right skills and qualities to head up a franchise store. It’s not all about whether you’ve got the right funds; you also need the right attitude. A good franchisee is dedicated, works well under pressure and has plenty of entrepreneurial spirit.
Support
The level of support provided by the franchisor is often key to the long term success of an individual franchise. Having access to ongoing support is one of the primary benefits of buying a franchise, so make sure you understand exactly what’s in it for you.
Good franchisors will offer a robust support package including things like initial store setup and design, corporate training, supplier contracts, operational and admin guidance, marketing, ongoing training and industry insights.
Steps to Buying a Franchise
Buying a franchise is a big commitment, and there are several important steps along the way before you can claim franchise ownership.
Step 1: Start with basic franchise research. Understand how franchising works and what your options are before selecting a franchisor who aligns with your interests and goals. Look into the brand’s financial history, public reputation and existing franchise stores to get a feel for the company.
Step 2: Ensure you meet your franchisor’s financial qualifications. If you cannot provide the minimum investment level or secure funding, it is unlikely your application will proceed, so having an action plan early on can be really helpful.
Step 3: Register your interest with an initial application. Once you’re confident in your choice of franchisor and that you meet the basic requirements, register your interest. This can usually be done with an online application form.
Step 4: Liaise with the franchisor. After your initial application, the franchise team will be in touch to talk more about your application, as well as send you extra documents about cost breakdowns, expectations and next steps. This is a good point to ask any questions you may have about the process.
Step 5: Supply the necessary documents. Once you have made it through the initial screening stage, you will need to supply essential documents such as a business plan, financial statements, proof of funds and any personal documentation to fulfil the requirements of the formal application.
Step 6: Read and double-check the franchise agreement. Once presented with the franchise agreement, carefully read through it and seek the advice of a franchise expert to help guarantee you understand everything and that the terms are as favourable as possible.
Step 7: Sign the franchise agreement. Once you’re happy everything is in order, you can sign the agreement, make the necessary fee payments and get ready to open your franchise!
How to Buy an Esquires Coffee Franchise
Interested in buying a coffee franchise? Here at Esquires, we know a thing or two about what it takes to bring a community-focused coffee shop to life.
If your franchising ambitions lie in the coffee industry, we’d love to hear from you. We’re currently looking to expand our presence across the UK, and are always on the lookout for like-minded entrepreneurs who share our ethos and passion for great, ethical coffee.
Why not start by checking out our brand brochure to find out a bit more about who we are and what we do? Or, fill out our online application to register your interest.
