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  • Writer's pictureAndy Fraser QFP

What's stopping you?

I’ve just started my own business. I’ve wanted to do so for a while and I’m by no means alone. According to new research by the Association of Accounting Technicians, 34% of 16-24 year olds in Scotland have the ambition to start their own business. This is more than a third! In 2018, the Bank of Scotland published their 'How Scotland Works' survey which suggested that 14% of Scottish adults are looking to set up their own business (an increase of nearly 20% on the previous years’ survey).

So, what happens? why do we not have more people starting new businesses in Scotland?

Perhaps there’s a fear of failure? Not having a solid idea? Lacking financial resources? Not having previous experience in business? All are common reasons for people avoiding taking the plunge.

For these people, the frustrated entrepreneurs stuck in the rat race, perhaps the answer lies in franchising?

Franchising is where an individual (a “franchisee”) buys a business-in-a-box from someone who has developed a proven and profitable business model (the “Franchisor”).

So why would someone buy a franchise, rather than set up on their own? Here’s just a few reasons:

Brand – I could start a sandwich shop, but it wouldn’t have the recognition of a Subway. I could open a café, but it might take me a while to build up the brand loyalty that Costa or Starbucks enjoy. By investing in a franchise, the franchisee is often acquires rights to a brand that has local, national or even international recognition. The franchisee can also share in the economies of scale that a bigger brand enjoys which brings a big competitive advantage! 

Proven System – The commercial failure rate of franchises is minimal compared to the failure rate of businesses generally. The reason for this is that the model has been tried and tested by the franchisor (and other franchisees in the franchise network). The franchisee should have the comfort that, if they work hard and follow the system, they are on track for great success.

Training – Usually franchisees do not require much prior experience in the field they have chosen. The franchisor should have a training programme designed to teach franchisees all they need to know. On top of this, the franchisor should provide a detailed ‘Operations Manual’ to the franchisee which tells the franchisee exactly how to run the business on a day-to-day basis.

Support – It is often said (usually attributed to Ray Kroc, the mastermind behind the success of McDonalds) that franchisees are “In business for themselves, but not by themselves”. The franchisor’s role is to support its franchisees. The success of the franchisor depends on the success of its franchisees. As such, franchisors will often have a fleet dedicated support staff to help franchisees with any business challenges they experience.

Banks like franchising – generally banks will fund new businesses on a 50:50 basis, which means that would be entrepreneurs have to save significantly before opening their own business. However, for the reasons mentioned above, banks like franchising and will lend up to 70% of the start-up and working capital costs of launching a new franchise, meaning that the franchisee does not require as much start-up capital as it otherwise would

This week is Scottish Franchise Week where the franchising industry comes together to celebrate the success of franchising in Scotland. The showpiece of the week is the ‘Franchise Opportunities Scotland’ exhibition taking place at the Radisson Blu in Glasgow tomorrow afternoon, where people looking to invest in a franchise opportunity can speak to franchisors actively recruiting in Scotland. More information available here -

If you think you might be interested in learning more about franchising, why not head along to Franchise Opportunities Scotland. Alternatively, if you are unable to attend, please give me a call on 0141 463 7065 or email me at andrew@albanyfraser.comto arrange a free, no-obligation, chat about investing in a franchise.

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