The low-risk route into business

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The low-risk route into business

TELEVISION hits such as The Apprentice and Dragon's Den are compelling because of their insight into the cut-and-thrust world of business.

Entrepreneurs who are looking for a less gruelling route to success should consider franchising.

This boom sector of British industry offers readymade solutions to the uncertainties of business. The big attraction is that you start up as part of an already established company, meaning you need less capital and can hit the ground running. Usually, the company or brand is a known name, and you get ongoing training.

This removes a lot of the risk and increases your chances of not just surviving, but prospering. The formula speaks for itself: about 90 per cent of franchise businesses are profitable within five years, when many other start-ups fail. Another bonus is that you do not need to have a business track record to prove yourself.

There is a vast choice of franchise opportunities - from management consultancy to computing, from retailing to recruitment. More than 200 companies will be exhibiting at the British and International Franchise-Exhibition taking place at Olympia on 24 and 25 March. All are seeking to expand in the UK, and there are global businesses too.

Visitors to the exhibition also get the chance to meet and learn from inspirational businessmen such as Bobby Hashemi, cofounder of the Coffee Republic chain, who will be conducting seminars.

With a franchise, you are given a licence to trade by the franchisor. You will need to put some money up front - anything from Pounds 5,000 upwards.

Often there is a service fee - perhaps eight per cent of gross income - and sometimes an advertising levy.

Franchisors also make money out of the mark-up on goods supplied.

After 15 years as a City broker, Tony Goreham started a new career as franchisee for Mixamate, which supplies concrete and flooring screed products to the building trade.

"Instantly, I saw the potential and realised it was too good an opportunity to miss, " he said. "What appealed most was being my own boss but under the umbrella of a big company. It's been a steep learning curve because I knew nothing about franchising or concrete, but it is hugely rewarding."

Franchisors say the ideal person is someone with ambition and enthusiasm, but not necessarily experience or knowledge of the sector chosen.

Indeed, franchisors often avoid people who have been in the same line of business before, believing you can't teach an old dog new tricks.

However, do not be fooled into thinking it is an easy way to make money.

You have to be the right type. Though franchisees are self- employed, they operate within a framework laid down by someone else - the franchisor - who exercises control to ensure the business is not devalued.

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