Setting up a franchise – an easy overview

on 29 October, 2014 at 12:14

One of the most daunting aspects of starting your own franchise, or indeed any business, is working through the finances. In an article for What Franchise magazine, A-Star Sports co-founder Sharon Bassett provides an easy overview of the costs to consider when looking into buying a franchise, from the purchase at the start of your career in franchising through to the re-sale at the end. The following list gives a brief outline of the key considerations and the initial topics to cover with a franchisor:

Buying and starting up

franchise fee
capital investment
working capital
professional service fees

Ongoing costs

management service fees
marketing levy
necessary purchases
additional training

The franchise agreement / renewal and resale

how the franchisor/franchisee relationship works with respect to rights and obligations, most often within a given geographical territory or location;
the provision of goods and services from the franchisor to the franchisee;
financial terms;
how long the initial agreement is for and what happens at renewal time;
the sale of an established franchise;
expected practice with relation to the trademark and brand;
any future adaptations to the franchise system;
how to end an agreement.

For a more detailed definition of terms and how they fit in to your business you can read the full ‘Money well spent’ article here.

Franchise businesses have an increased chance of success compared to independent start-ups

In an article for The Guardian this year (Too many startups fail), Theo Paphitis said, “50% of all small businesses fail in the first couple of years. It’s a damning statistic but it’s true.” Franchising is significantly different – four in five new franchises are profitable within two years. Additionally, findings from the 2013 NatWest/British Franchise Association franchise survey show a total UK economic contribution of £13.7 billion, which is indicative of the power of franchising systems and their proven business formats.

Visit our ‘Become a franchise owner’ page to find out more about A-Star Sports franchises and/or drop us a line on the form below:

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