Buying a franchise is one of the more structured ways to go into business for yourself. You get an established brand, a proven model and ongoing support. But you also take on costs, rules and a relationship with a franchisor that shapes how you run things day to day.
This guide explains how franchising works and helps you work out whether it's a good fit for you.
Franchisor and franchisee
A franchise is a licence to run a business using someone else's brand, products and systems. The company that owns the brand is called the franchisor. You, as the person buying the right to use it, are the franchisee.
In exchange for an upfront fee and ongoing payments, the franchisor lets you trade under their name and gives you access to their business model, training and support. You run the business yourself, but within the rules and standards they set.
Well-known examples include McDonald's, Subway and Anytime Fitness, but franchising spans almost every sector, from cleaning and care to estate agency and tutoring.
How the money works
Franchise costs vary widely, but most involve an initial franchise fee, which can range from a few thousand pounds to several hundred thousand depending on the brand and sector. On top of that, you'll usually pay ongoing royalties, typically a percentage of your monthly turnover, and contribute to a central marketing fund.
You'll also need to fund the setup of your premises, equipment and stock, and cover your working capital until the business is generating enough income to sustain itself. It's more upfront investment than starting from scratch in some ways, because you're buying into something established rather than building gradually.
In return, you're getting a business with a track record and a customer base that already recognises the name.
The advantages of franchising
The biggest draw is reduced risk. You're starting with a model that has already been tested. The franchisor has worked out what works, what doesn't and how to make the business profitable. That learning curve has already been fought through by someone else.
Franchise businesses also tend to find it easier to get finance. Lenders are more comfortable lending against a proven model with a track record than against a brand new business idea. Some franchisors have relationships with specific lenders and can help you through the process.
The ongoing support is another real benefit, particularly if you're new to running a business. Training, marketing materials, operational guidance and a network of other franchisees to learn from can make a genuine difference in the early years.
The disadvantages of franchising
You don't have full control. The franchisor sets the rules on branding, pricing, suppliers, opening hours and much more. If you're someone who wants to do things your own way, that can feel restrictive.
The ongoing royalties can also weigh on your margins. Even in a difficult month, you're still paying a percentage of turnover to the franchisor, not just when things are going well.
And not all franchisors are equal. Some offer genuinely strong support. Others are less hands-on once the initial fee is paid. It's worth doing your homework on the specific franchisor, not just the brand.
Questions to ask before you commit
Before signing a franchise agreement, speak to existing franchisees, not just the ones the franchisor puts forward. Ask them honestly whether they'd do it again, what support they actually received and whether the financial projections they were shown matched reality.
Get the franchise agreement looked at by a solicitor who specialises in franchising. It's a long and complex document, and the terms matter. The British Franchise Association (BFA) is a good starting point for finding accredited advisers.
Also think honestly about whether this particular brand and sector is something you want to work in every day. Enthusiasm for a brand from the outside can look different once you're inside the operation.
Is franchising right for you?
Franchising suits people who want the security of a proven model and are comfortable working within a defined framework. It's a good fit if you want to run your own business but don't want to start completely from scratch.
It's less suited to people who want full creative control, or who are looking to build something they can eventually sell as their own brand. In a franchise, you're building someone else's brand, not your own.
Neither path is objectively better. It comes down to what kind of business owner you want to be.
Frequently asked questions
Yes. Many lenders, including high street banks and specialist business lenders, will consider lending for a franchise purchase. Because franchise businesses have a track record, lenders often view them as lower risk than a brand new business. Some franchisors have preferred lenders they work with and can make introductions. You'll still need to put in some of your own money alongside any borrowing.
Your franchise agreement will set out what happens if you want to exit. Most agreements allow you to sell your franchise to another buyer, subject to the franchisor's approval. Some have a right of first refusal, meaning the franchisor can buy it back first. Leaving before the end of your agreement without following the correct process can have financial consequences, so it's important to understand the exit terms before you sign.
They're similar but not the same. A licence gives you the right to use something, like a brand name or a piece of software. A franchise goes further. It includes the full business system, ongoing support and a much closer ongoing relationship with the franchisor. Franchise agreements also tend to be more tightly regulated and involve more obligations on both sides.
