Franchises
How we can help you with your franchise
According to the British Franchise Association (BFA), the 48,600 franchise businesses in the UK contribute £17.2 billion per annum to UK GDP and employ 710,000 people. In fact, many of what we assume are just ‘High Street chains’ – such as McDonald’s, Clark’s (the footwear company), Subway, Costa and Vodafone stores – are actually operated on a franchise basis. As it says on the franchising section of the McDonald’s website: “I didn’t start up. I built up.”
Franchising can be attractive to entrepreneurs who want to own and operate their own business but want the support and guidance of an established brand. It provides a way for businesses to expand their operations, without the financial and logistical challenges of perhaps opening a new location for themselves.
Both parties will sign a franchise agreement which is a legally binding contract, outlining obligations and responsibilities, which typically lasts for five years. The franchisee pays an initial fee to get started and then, typically, an ongoing monthly fee which is usually a fixed amount or a percentage of turnover.
In return, the owner of the brand (the franchisor), provides everything they need to start and run their business successfully. Usually, they will deliver all the initial training, tools, equipment and systems required and provide ongoing support.
According to the BFA, franchising has a significantly lower failure rate versus going into business alone. It says that, on average, over 40% of standalone businesses fail compared with less than 5% of franchisee businesses. As the BFA explains ‘your franchisor has already made the mistakes, so you don’t have to’.
Here at Lewis & Co we have worked with a number of franchisees over the years – helping them to secure their particular franchise and supporting them as they build their business.
Starting a new business comes with risks and there are many advantages to buying into a franchise instead. It is your own business, but it comes with a name which the general public might already recognise – certainly when it comes to brands such as McDonald’s – and you’ll usually get support in areas such as marketing.
In terms of your accounts and how we can help you, from a day to day perspective, your business will typically operate just like any other limited company. You will have an initial investment to consider though and, typically, regular franchise fees.
If you are taking over an existing franchise operation – such as a restaurant which is already open – then, here at Lewis & Co, we can help you with some initial due diligence. We can help you to understand previous years’ accounts and highlight any discrepancies or aspects you might want to question, before signing up to the franchise agreement. We can also support you in looking at future projections or forecasts for the business and budgets.
If you then decide to go ahead with buying the franchise, we can provide you with the accountancy services you need.
If thinking about investing in a franchise, please do call us for a chat. Tel: 01892 513515 or email: info@lewisandco.biz