Do you have to be rich to open a franchise?

Alan Wilkinson writes:

The short answer is no, you do not have to be rich to open a franchise.

There are franchise opportunities available at all levels, from a few thousand pounds up to multi-million pound investments.

Franchises fall into one of three categories. The first is the owner-operator. This is where the franchisee works in the business themselves. Typically, this type of franchise will have a lower investment, and may provide the franchisee an income which can sustain a lifestyle. These opportunities may be part-time, and generate a few thousand pounds per year of profits, or full-time and could earn the franchisee tens of thousands of pounds per year.

The next category is a management franchise. This typically requires a larger upfront investment, both in terms of franchise fee and also infrastructure. This is where the franchisee has a team of people working for them. This may involve the purchase of vehicles, or the setup of premises, which can require a significant investment but can also generate a significant operating profit.

Then there are investment franchises. This is where the franchisee invests in a brand, and employs a whole team, including a manager to run the business for them. Often food and beverage brands have investment franchisees, who often have multiple units, and even multiple brands. The investment can be high, but then the rewards can also be high.

Funding can be obtained from the franchise departments of the major banks, and through various government backed funding schemes to cover the set-up costs and working capital requirement for new franchisees.

With good due diligence and research, a prospective franchisee can usually find the right franchise opportunity at the right investment level for them.

Alan Wilkinson is head of franchise development at The Franchising Centre and has been in franchising for over 25 years.