To franchise or not to franchise

Whether or not to franchise can be a difficult decision for many business owners – What is involved? How do I protect the core venture? Will I get sufficient return on my investment? And what exactly does business format franchising entail as opposed to other expansion models?

Often, the cost and time involved in scaling one’s venture depends on the complexity of the business, the proposed system and the current position. So making the initial decision as to whether franchise is right or not, can be difficult. Notably, the NFC has identified key elements in this decision-making process inclusive of understanding expansion models, legal considerations, financials, brand development, marketing, systemisation, Intellectual property and the importance of speaking with people who have been through the process (both franchisors & franchise owners).

Indeed, the relationships between business format franchising, licensing agents and distributors can be muddied; however they are all forms of expansion hugely relevant to many businesses. In 2010, the Irish Franchise Association reported that the annual turnover of franchise activities in the country was worth £2.419 billion and employed nearly 43,000 people. The British Franchise Association (bfa) advised that it was worth £10.8 billion to its economy and had grown by 44 per cent in the last decade.

Thus, it is clear that the potential for growth within the franchise sector, (despite a recessionary decline) has remained, possibly as a result of its core function – replicating successful business models in an ethical manner.

Businesses who wish to pursue such a growth model do have access to unbiased support in the form of the National Franchise Centre (NFC) which is a not for profit venture established by Limerick Institute of Technology in Partnership with Limerick Chamber.

Currently the NFC offers “Franchise START” which helps business owners/Managers to evaluate their current situation and what planning is required in these key areas. The programme is five days in duration, and facilitates those who wish to assess the feasibility of business expansion using various models.

Dr. Fergal Barry, President of Limerick Chamber & Vice-President of Research, Enterprise & Innovation LIT advised: “The merits of Franchise START lie in its practical and utilitarian approach to expansion models”.

Martina McGrath, Centre Manager noted “this programme helps to demystify the business format franchise concept, offering a true insight into the investment required in order to scale ones business. For some, franchising offers an excellent platform for expansion, however gaining a knowledge base to enter into this sphere knowingly can be an uphill and costly exercise. Franchise START is catered to those who need to determine their suitability to the model; in addition to those who need information on best practice and ethical operations.”