Starting a new business with a new idea requires a huge amount of planning, skill, and perhaps luck, on the part of the business person. Government figures suggest that only 70% of new businesses will survive for three years. This is why some entrepreneurs turn to start a franchise business instead of starting from scratch.
Reasons for the high 70% failure rate is due to:
- The business idea not being good enough.
- Other firms copying the idea as they rush into the market.
- Poor customer review wrecks product or service
- Design and decorate a store that will create the right customer image.
- Create systems for staff training, stock control and accounting.
- Do your own advertising to bring in customers, and to make them willing to pay the high prices charged by opticians.
- A training program so that franchisees learn to do things 'the Specsavers way'.
- A system of pricing that is profitable without putting off potential franchisees; usually the franchise rights are bought for £10,000-£100,000, then the franchisee must buy all store fittings and equipment via the franchise owner (this may cost £50,000-£250,000_, and then buy all supplies from the franchise owner; on top of this, a 5% royalty fee is usually paid on all income and a fee of 3-5% to contribute towards the national advertising campaign.
- A system of monitoring, so that poorly run franchises do not damage the reputation of the brand.