Take your Time when Investing in a White Collar Franchise

A white collar franchise is a low cost way to start a business, but don’t jump in feet first, Gemma Tumelty, managing director of The HR Dept, advises

In the past, franchising has been generally, although not solely, best known and often most successful among so called blue collar industries.

But times are changing and as more companies look to outsource professional services, white collar franchising is becoming significantly more commonplace in the business-tobusiness market.

It’s an attractive and low cost option for starting a business, because it involves selling knowledge and experience with low overheads, usually working in the early days from a home office, as there’s no need for stock or a shopfront.

Relying heavily on the strength of the brand, good systems, models and intellectual property, opportunities now abound for professionals in sectors from legal advice and accountancy to health insurance and business coaching who prefer to work under their own steam.

The HR Dept, for example, is a business based on a network of licensed franchisees who operate independent human resources businesses offering advice and support to small and medium-sized enterprises in the UK, Ireland and Australia.

Many experts with a background in big business, sick of corporate life and the travel that comes with it, are looking to strike a better, often more family-based work-life balance, so white collar franchise opportunities are growing in popularity.

White collar professionals who want to reap the benefits of their efforts, rather than seeing them going into the pockets of their employer, could find that buying a franchise is the way forward.

Don’t just jump in feet first, though. There are certain things we’d advise looking out for:

Find an established and proven business

While the growth in white collar franchisees is relatively recent, there are plenty of companies that have used franchising as their basis for growth for many years.

They will have established systems and processes, a strong and positive brand identity and a network of other franchisees, which will make running your business significantly easier during the challenging first few months.

Make sure your values are aligned, as this will be crucial for ensuring a good fit in the franchise system.

Check your franchise agreement

Your franchise agreement sets the boundaries and parameters under which your franchisor will expect you to operate.

It should be thoroughly reviewed before entering into any arrangement. If you don’t like the terms, don’t sign up. You will most likely be held to them should anything go wrong.

For example, what are the exit terms if you decide it isn’t working for you?

Are you willing to be restrained by a territory and to take part in compulsory national initiatives? If not, you should seriously consider whether this is the right opportunity.

Also, are you comfortable with the fee structure? At The HR Dept, we take a flat fee, rather than a percentage of profits, meaning only our franchisees are rewarded when their businesses become more profitable.

It works well for us, but every organisation is different and you should be clear on this aspect of the relationship before signing up.

Room for ambition

The most recent NatWest British Franchise Association survey shows that 29 per cent of franchisees run multiple units.

White collar professionals may well be perfectly happy - many of our franchisees are - to run essentially a sole area or unit, perhaps with some administrative support.

However, you may be keen to expand your business, either by taking on staff to grow your client base within one territory or expanding geographically to new territories once your initial franchise is up and running.

That’s the beauty of the franchise model - it allows for flexibility and growth, depending on your own individual circumstances and ambitions. But check if this is possible in your chosen franchise. How would you grow? Does the franchisor make it affordable for you to do so?

Network of other franchisees

Our franchisees have major input into the successful development of our business - they help us design and launch new products and services and often act as mentors to our new franchisees.

They’re a great asset and I’d advise white collar professionals looking to set up on their own to find a company that optimises the existing network’s ability to help others get started.

This is particularly relevant for white collar professionals leaving corporate life and setting up within the SME community. The two worlds are very different and your new environment will take time to get used to.

Having a network of other experts who have been through the same process can be invaluable.

Training is vital

Always research the training offered by your franchisor as you start your new business. You may be an expert in your field, but running a business will probably be a whole new experience and, especially in a company with a range of products and services, training is vital.

Look out for financial training and advice on typical customer profiles, for example, again with the benefit of feedback from other franchisees who have sold the same services.

You should also seek advice on selling points versus your competitors.

How do you promote those competitive advantages and communicate the details that make you the best option?

Support structure

Whether the franchisor’s success depends on a percentage of franchisee profits or on successful renewals, your survival and prosperity is in its interest.

As such, ongoing support is a hallmark of an effective franchisor. Starting any small business is difficult and you should choose a company with a track record of looking out for its franchisees.

Communication is key to effective support. Is there a sufficient head office presence to look after the range of concerns new and existing franchisees will have? Are the administrative, marketing and operations functions adequately looked after? Does the franchisor provide support for franchisees if they’re taken ill or leave?

Ultimately, the success of your own business will depend on the quality and continuity of the services you provide to your clients and it’s going to be a great help if your franchisor can assist with this when necessary.

Marketing mix

An established franchise company will have existing marketing support, which can greatly help new franchisees looking to establish their brand locally.

Marketing initiatives such as newsletters, blogs, templates for printed collateral and a centralised media relations function will help, alongside raising awareness of the brand nationally and potentially globally too. It’s all part of what makes a franchisor successful.

As we always say at The HR Dept, our franchisees are our biggest asset. Since our success depends on the success of their operations, it makes sense for us to do what we can to make that happen.

We suggest you look for something similar when you’re looking for a franchisor to do business with.