Many ambitious small business leaders across the UK face the question at some point in their journey: how can you continue grow your brand without taking on unmanageable costs, or major risks?

One option is to franchise your brand. It may feel like a perilous move but it’s proven incredibly successful for countless businesses out there.

The inspiration to take the leap may come from franchises of another nature: namely big film franchises. The sci-fi adventures featuring unlikely heroes and dark forces in far-away galaxies, the epic fantasy quests with gold-hoarding dragons and brave fellowships, and the tales of magical discovery and boy-wizards. These all span numerous movies, video games, theme parks and licensed merchandise ranges. Taken in a business context, these are inspiring examples of how one idea (albeit an exceptional one) can lead to multiple business models and revenue streams.

The interesting point for small businesses is that the multi-layered success of these brands didn’t happen alone. They began as compelling brands that grew by sharing the risk, investment and resources involved in expansion with partners – from playwrights to film studios.

From a small business perspective there are similarities in how franchises (of the non-cinematic variety) can be used to transform small but powerful brands into bigger success stories through collaboration.


Sparking growth

Entrepreneurs pour their hearts into building great businesses, but most focus on a single operation and stop there – the most recent stats from BIS estimate that there are more than 4 million sole traders in the UK. Some could go on to open ten or twenty sites, but logistics and costs can seem insurmountable.

While it comes with an unhelpful reputation for being prohibitively expensive, franchising is ironically one of the cheaper and lower risk ways of expanding a successful enterprise. What’s needed is a repeatable formula and initial funding, which might come in the form of a bank loan or asset backed loan.

While we’re on finance, successful franchising depends on a proven business model that enables affordable start up costs for potential franchisees.


Spreading the risk

When you’ve got a great brand that’s turning a profit, there are a number of ways to grow it. The first – if applicable – is to take the business online in order to broaden your customer base. Alternatively, it might be to invest in a larger or additional site or location. This option carries with it certain risks however, and a potentially safer route could be to franchise it.

Going down this route involves working closely with franchisees, especially as they start up and structure their enterprise, so choose your partners wisely.


Measuring success

Clear management information is integral to franchise success. As a franchisor, data can empower you to make more informed and effective decisions. The key is to monitor each franchisee closely because ultimately, if you entrust your brand to someone else and they do a badly, it’s your responsibility to fix it.

For the creators of those iconic cinema brands (and in some cases, their families), many have maintained control by stipulating certain clauses in contracts, such as creative sign-off or production consultancy. This is a trick that franchisers can emulate to ensure quality across all franchises.

Keep an eye on your profit and loss data, along with other key performance indicators relevant to the business and make sure you spot issues and step in before they escalate.

By doing this, you can learn from best performers and share that wisdom amongst franchisees – training up poor performers from rotten tomatoes to epic success stories.


At KPMG Small Business Accounting, we have redefined how we believe a business and their accountant should work together. Check out our accountancy, tax & business growth services to learn more about how we can help your business.

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