Franchising your business

You, the franchisor, grant a licence to your franchisees to operate a business under your name and system to market your products and/or services for a specified period, helping your company to expand. You get:

• an initial franchise or licence fee for training the franchisee and assisting in the launch of the business
• a share in the success of the business, normally through a management services fee in the form of a percentage of their turnover, or through a mark-up on the goods you supply

Please read this important legal information

How franchising has increased

In 1984, sales of products or services through franchised outlets in the UK were worth less than £1 billion. By 2007, this figure had risen to £12.4 billion. The number of franchise systems and franchised outlets has also increased substantially. So:

• franchising is growing globally, particularly in continental Europe. It makes it easier for companies to expand internationally - some franchising companies are now among the largest multinational operations in the world
• the franchisee trades under your established name, using your proven, successful business system
• they enjoy the benefits of your advertising and marketing programmes, and your purchasing power
• they don't generally need any previous experience of your type of business, as you train them and provide ongoing support
• the franchisee also has the benefit of your full commitment to the continuing success of their business, since your income is dependent on theirs. If they aren't successful, neither are you. This close inter-dependence is unique to franchising

How successful are franchises?

Franchising relies for its success on its popularity with the franchisees. So it's important to know how successful franchisees generally are in the marketplace. You can find out from the annual NatWest/British Franchise Association (BFA) survey. This has consistently shown that the failure rate of franchisees for financial reasons is substantially below that of the failure rate for independent small business start-ups.

To find out more, please call the NatWest Franchise team on 0800 092 9117, Monday to Friday 9am to 5pm (ex public holidays) or visit your local NatWest.