How to Franchise a Business

Franchising is a powerful way to grow a business beyond its original location. It allows you to expand using other people’s investment and effort while retaining control over the brand and business model. However, it is not a quick or easy path. Franchising requires careful planning, a proven concept and a commitment to ongoing support and systems.

This guide explores what franchising is, why you might choose to franchise your business, how it works in practice, and what legal, financial and operational considerations you need to understand.

What is a Franchise?

A franchise is a business model where an existing business owner, known as the franchisor, grants another person or business, called the franchisee, the right to operate under their brand. The franchisee uses the franchisor’s systems, trademarks, processes and support to run the business, typically in a different location.

The relationship is formalised through a franchise agreement, which outlines the terms, conditions, territory rights, fees and obligations on both sides. The franchisee usually pays an initial fee to join the network and ongoing fees for continued support and brand access.

Common examples of franchises include fast food restaurants, coffee chains, gyms, cleaning services and tutoring businesses.

Why Franchise Your Business?

Franchising can help you scale your business faster and more cost-effectively than opening new locations on your own. It allows you to expand your brand presence using the capital and motivation of independent franchisees, who have a personal stake in their success.

You retain ownership of the brand and benefit from a larger market footprint, improved buying power and more exposure. Franchising also allows you to grow into new regions or even countries without needing to oversee every location directly.

However, not all businesses are suitable for franchising. Your business should already be profitable, replicable and able to demonstrate that it can succeed in a variety of locations with the right training and support.

Company Setup and Legal Considerations

To franchise your business in the UK, you do not need a special legal status, but you must have a legally sound franchise agreement and protect your intellectual property, such as trademarks and trade secrets.

Many franchisors operate under a limited company structure, either as part of their existing company or by setting up a separate franchising arm. Some franchisors create a dedicated franchising company that owns the brand and intellectual property, which then licenses the rights to franchisees or a management company.

It is essential to work with a solicitor experienced in franchising to draft the agreement and ensure your company structure, trademarks and brand materials are protected.

You should also create an operations manual that outlines every process in your business, from recruitment and sales to daily operations and customer service. This becomes the blueprint for your franchisees and ensures consistency across the network.

How Franchises Work in Practice

Franchisees typically pay three types of fees:

1. Initial franchise fee: A one-off payment made to join the franchise. This covers training, setup support and the rights to use your brand in a defined territory.

2. Ongoing management service fees: Usually a percentage of turnover, paid monthly or quarterly. This fee covers ongoing support, marketing and access to systems.

3. Marketing contribution: A regular payment used for national or regional advertising campaigns.

As the franchisor, you earn income from these fees rather than directly from sales. Your role is to train, support and oversee franchisees while protecting the reputation and performance of the brand.

Franchisees are usually responsible for day-to-day operations, staff hiring, local marketing and customer service. They run the business independently but within the framework you provide.

Managing a Franchise Network

Running a successful franchise network requires systems, support and strong relationships. You will need to:

• Train new franchisees and their staff

• Provide marketing and business development resources

• Ensure consistent quality and brand standards

• Monitor performance and provide coaching where needed

• Handle disputes or underperformance

• Continue evolving the brand to stay competitive

Some franchisors appoint regional managers or area developers to help oversee franchisees in specific territories, especially as the network grows.

Communication is key. Regular check-ins, training sessions and national meetings help foster a sense of community and alignment within your franchise network.

Advantages of Franchising

Franchising allows you to grow without taking on the full financial and operational burden of new locations. Because franchisees invest their own money and are highly motivated to succeed, performance can often exceed that of company-owned outlets.

You can scale more quickly, extend your reach geographically and build a recognised brand. With each new franchise, your revenue grows through upfront fees and ongoing royalties.

It also allows you to remain relatively lean in terms of staffing and infrastructure, focusing on support and oversight rather than running individual branches.

Disadvantages and Risks

Franchising is not without its challenges. Loss of control can be an issue if franchisees do not follow the system. Poor performance or bad customer service at one location can damage the entire brand.

Managing relationships across a network requires time, patience and clear expectations. You must invest in systems, training and support before you begin scaling.

Legal disputes can arise if expectations are not met or agreements are not clear. It is vital to have watertight contracts and protect your intellectual property from the start.

Not every potential franchisee will be suitable. You will need a robust recruitment process to find individuals who are financially stable, aligned with your values and capable of running a business.

How to Measure Franchise Success

To assess whether your franchise model is working, track performance across the network using consistent metrics. These may include:

• Turnover and profit per location

• Customer satisfaction scores

• Franchisee retention rates

• Compliance with brand standards

• Network growth and new franchise sales

• ROI from marketing activities

• Speed and cost of onboarding new franchisees

Surveys, financial reports and direct communication all play a role in monitoring performance. Franchisors often use CRM and operations software to collect and compare data across locations.

Final Thoughts

Franchising a business can be a rewarding and highly effective growth strategy, but it is not a shortcut. It requires structure, planning, legal protection and a long-term commitment to supporting others who are investing in your brand.

If your business is profitable, proven and easy to replicate, franchising could help you scale rapidly without the financial risk of expanding alone. With the right setup, a clear agreement and strong ongoing support, you can build a thriving franchise network that benefits you, your franchisees and your customers.