Starting a franchise with debts: ask the expert

I’d love to start a franchise so I can go part time in my day job. However, there is no way I can afford some of the costs they incur. I am currently in the process of an IVA which will last up to six years so therefore no credit company or bank will look at me. I have no other way of putting up such a large amount upfront. Are there any franchises out there that run off a ”monthly” payback or take any profits earned as payment? Or do I have to wait the six years?

I would be very sceptical of any company calling themselves a proper franchise without any upfront costs involved. You do occasionally (as a rare exception) get franchises setting up financing arrangements to help get exceptional candidates set up in their networks, but these will tend to be more involved businesses that wouldn’t be something you could run alongside a job.

Any good franchise will be investing in support, training and development. They will also incur considerable costs in proper recruitment processes and ongoing protection of the brand and business. All of this requires investment from the franchisee both upfront and as an ongoing management service fees.

There are some excellent franchises which require a relatively low initial fee, but every ethical and sustainable franchise does require something upfront financially; so it may be that you have to wait before you’re able to start up yourself. The British Franchise Association website will give you an abundance of advice when you think you’re ready.

Of course, there will be business opportunities out there where you are effectively taking on a job or licence to sell a product or service without these fees – but these will not be franchises and you will not be able to put the same checks in place like you can with franchising.

Tom Endean is marketing manager of the British Franchise Association and has developed and managed the communications, brand,  press relations, general marketing, events and partnerships with the bfa since July 08.

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