6 features of an ethical franchise

These are the key characteristics of the best performing businesses in the sector

It’s no secret that the UK’s small business community has been hit hard over the past 12 months. This has been widely reported and sadly, as a result, many people have been made redundant and numerous companies have closed their doors for good.

However, there is some light at the end of the tunnel for those who are keen to embrace a new chapter in their life.

Year on year, the British Franchise Association has announced growth in franchising and we’ve found that following an economic downturn the industry experiences an uptick in interest, as people look to take control of their future.

Funding institutions are also open for business. We’ve been speaking with some of the leading franchising teams and there are some fantastic solutions coming that will provide funding support for the sector. Watch this space.

Becoming a franchisee can be an excellent way to start your own business, with a hugely reduced risk of failure compared to setting up independently. So to help you in your search, here’s some key features of an ethical franchise:

Business format franchising

The term ‘franchising’ has been used to describe many different forms of business relationships, including licensing, distributor and agency arrangements.

The more popular use of the term has arisen from the development of what is called ‘business format franchising’. This means your investment entitles you to operate under the umbrella of a brand with ongoing support.

Trading evidence

A business format franchise should have proven its model before mass marketing franchise opportunities.

One of the benefits of investing in this type of franchise is that the mistakes have been made, the operations defined and the projections proven by either the franchisor directly or a pilot. In some cases, you may have the opportunity to be the pilot.

Franchise agreement

Franchise agreements are legal contracts produced to protect the franchisor’s brand, system and wider network.

That said, they should be comprehensive and fair and it’s for this reason we strongly recommend you have an independent franchise agreement review to fully understand your rights and obligations before signing. You can find an accredited franchise solicitor at thebfa.org.

Support structure

The franchisor should have a clear support structure that will help you get up and running, but also provide ongoing assistance throughout the duration of your relationship with the company. The right franchisor-franchisee mix can be a powerful combination for increasing brand value and consumer awareness, which wouldn’t be achieved as easily if you were a sole trader.

Comprehensive training

One of the great benefits of franchising is that, in most instances, you don’t need experience in the field of work or qualifications related to it. That’s because franchisors will provide comprehensive training and onboarding programmes to support you in your set up if you display the right personal traits and qualities.

Being transparent

Business format franchising may be an investment, but it means you’re entering into a partnership with a franchisor. Franchisors should be transparent with you about what to expect, their ambitions for the business and their own trading history.

The strength of franchising as a business model is becoming clear: networks have been able to pivot and franchisors have shared pains to support their franchisees, which is unique to business format franchising.

The author

Emily Price is chief operating officer at the British Franchise Association.