Is Franchising in the UK a Good Opportunity?
Growing your business internationally means you need to build sustainable relationships. Franchising grows your business globally and it is all about relationships and partnerships.
In an exclusive conversation with Franchise India, Matt O'Neil, Founder of Franchise Advisory Services Ltd, explains the franchising market in the UK. He further elaborates about the franchise relationships, stating “franchising is all about understanding relationships.”
Lifecycle of Franchising Relationship
Matt explains the stages in the life cycle of a franchising relationship:
1. Building Sustainable Relationships through Research - There has to be a mutual passion and commitment to ethical franchising. Online research on business history, training support will be helpful to understand the business.
2. Discovering the Franchisor - Talking to other franchisees will give an insight into the franchisor. The confidence grows as you know each other. Prepare all the due diligence with legal advice.
3. Meet the Franchisor - Talk about concerns and ask questions to validate the franchisor’s claim. Discuss about the training and support.
4. Build TRUST - This is the period of engagement.
U- User focus
Both the franchisor and the franchisee should be truthful.
5. Franchising Agreement and Training - After the business plan is ready and funds are in place, the agreement is signed and training begins. During the Covid times, the training is done online now.
6. On-Going Support - The reality sets in and the franchisee needs constant support from the franchisor. “Franchising blues” can be dealt with tactically through business advice.
7. Resolve disputes and exit strategy - Disputes can be inevitable. Solving disputes through communication and business advice will make the journey for the partners easier. Planning an exit strategy is good since not everyone starts a business and runs it forever.
Challenges Post Covid
The UK is a very strong franchise market similar to India. It is a shopkeeper nation where people run their own small business. The UK has witnessed political unrest that has affected the franchise businesses. But with Covid, some businesses have boomed while others are affected because of the lockdowns.
The UK is providing people with a furlough scheme where the salaried and self-employed are given compensation. But after the end of this scheme, there is going to be an increase in unemployment. Unemployment is good for franchising since it makes people think to invest in franchising to control the future.
Franchisees or self-employed new start-ups don’t fall into the furlough scheme and face difficulties. But, the franchisor has been helpful and has greatly reduced or waived off the franchise fees for them.
The government quickly reacting to stimulation by providing business loans and cheaper loans has helped. Companies are also providing mortgages to support franchising. Banks are also supporting franchising and 70% of the total for franchising. Banks also gave seminars throughout the year to those who knew nothing about franchising. Presently they are doing these seminars with advisory services, online.
Indian and UK Markets
The maturity and capability of understanding the customers are much better in the UK than in the US. The real estate and formats are similar in UK and India. Because of the proximity, cultural understanding, sensibility to business model both nations have a lot of similar businesses.
The only difference that keeps businesses away from entering each other's markets is that small corporate franchises don’t have much appetite to move internationally.
Knowing the legal terms concerning exporting your business or starting a new franchise in the UK can be easier with the help of specialist lawyers. Whenever there’s a conflict that is not resolved by communication, there is arbitration. The franchisors can re-sale the franchise if they don’t want to continue rather than taking the legal route. In India, franchise resale is not a mature market. In the UK, it is a mature market.
Resale of Franchise
Franchise resale has been seen in negative terms like the business is not working well. But now, it is seen as positive. Franchisee wants to grow and can sell the franchise to move to another field. There are companies now that deal in franchise resale.
Sometimes you need to take the legal route when some people abuse the brand or the system. Under such circumstances, you have to take the other franchisees' help and move towards the legal route.
Matt says that for a franchisor to enter the UK market, he would ask what support did the brand give its franchisees during Covid 19. Because the present model cannot be based on the past model and the future is uncertain.
To enter the UK market as a franchisee, one must follow the business model of the franchisor and keep positive in the early days. It is very necessary to have clear communication and one might panic but it is because you are not used to it.
Edited By: Vaishnavi Gupta