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
Many of these problems can be avoided if the entrepreneur goes for a ‘halfway house’ towards running their own business: a franchise. Research shows that 93% of franchises survive their first three years compared to the 70% of new businesses.
- 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.
Alternatively, you could start up your own, 100% independent limited company, and then sign up for a Specsavers franchise. This would mean, for example, access to the specially written Specsavers store management software. From a scan of a sold pair of glasses, the software ensures that all the necessary stock ordering and accounting actions are taken. The franchise owner (Specsavers) also provides full training for the franchisee (the entrepreneur), plus advice and supplier contacts for store decoration and display and, of course, the huge marketing support offered by a multi-million-pound TV advertising campaign. If you start up J. Bloggs Opticians, how many people will come through the doors? If you open up Specsavers, customers will trust the business from day one.
- 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.
Franchises are run independently the franchisee or entrepreneur. However, the franchisee must work within the rules laid down by the franchise owner. These will cover the store décor, the staff uniforms, the product range, the product pricing, and much else. Yet the franchisee will still have to manage: staff recruitment, training and motivation; stock ordering; quality control and management; effective customer service.