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Franchising is an ideal way to set up a business without taking a huge leap into the unknown.

GreenThumb is a franchise business, which provides a service to improve the health and look of lawns.

It was started by Stephen Waring in 1986, when he was just 19.

He got the idea from a visit to the United States, where one in four homes has its lawn treated by similar services.

Business is blossoming

He gradually built up his business until four years ago a customer asked how he could start something similar, and GreenThumb moved into franchising.

Now his company treats 50,000 lawns across the UK through a network of 48 franchises.

The business has big plans. Stephen hopes to be working on one million lawns and have some 3,500 employees within five years.

Getting on board

To buy into the GreenThumb franchise you will need �30,000. For that you get training, a liveried van, a computer, lawn care products and national marketing.

"It doesn't cost you a fortune," says Stephen, who is enthusiastic about the potential for growth.
Stephen Waring, founder GreenThumb
Stephen: "Franchising is a very good way of expanding the business."
"This is a business targeting a new market that will grow and grow, and you can run the business from home," he says.

Popular

Franchising is popular in the UK, with 660 businesses operating through 36,000 franchises.

Some well-known names are franchised: McDonalds, Wimpy, Pizza Hut, Domino's Pizza, Thrifty Car Rental, Body Shop and the British School of Motoring, to name a few.

What exactly is a franchise?

It's when a business owner - or franchisor - allows others -franchisees - to use it's name, products and goodwill.

The franchisee will have varying degrees of control over how products and services are marketed or sold.

How much will it cost?

The initial fee can range from �5,000 to �500,000.

If you want to run a Post Office Counter, that costs �250,000. A Snappy Snaps franchise is �120,000.

On top of that, you can expect to pay a management service fee, which is usually a percentage of turnover - anything from 10% to 25%.

There could be a contribution to an advertising pool and some franchisers insist you pay them for marketing or products - sometimes at marked-up prices, so watch out.

What are the benefits?

Simon Wise, deputy director of the British Franchise Association (BFA), says: "It's popular because there are many different types of business now embracing franchising - it's not just pizzas and burgers."

He adds: "There are wider opportunities for people with different skills and experience."

Another reason franchising is popular is that figures show more than 90% of franchise-businesses make a profit within two years.

This is much higher than for non-franchise businesses.

Getting backing

Also when it comes to money, banks tend to favour franchises over other start-up businesses.

This is because they are proven brands with someone behind the scenes helping to ensure they succeed.

Things to consider

Simon Wise says that anyone thinking of buying a franchise simply must do their homework. When choosing a business, he recommends concentrating on four key areas:

Brand - is it established, a proven success.

System - what the BFA calls the know-how. Again, is it proven and can it easily be transferred to a new franchisee.

Support - it might be your own business, but the back-up is vital.

Agreement - the legal bits which tell you what you can and can't do.

When you've picked the business, see if it is BFA accredited - not all franchises are, but it means someone has already run the rule over it.

Check it out in Companies House to find out more about it and have a professional examine the legal agreement.

Most important of all, says Simon, is to speak to other franchisees to see how they're getting on.

More information

Lots of information on franchising can be found at the National Franchise Exhibition.

There are two or three of these each year - the next one is on 5 and 6 October at Birmingham's NEC.

It coincides with National Franchise Week, which runs from 1 to 7 October.

Or you can check out the websites listed on the right hand side of this story.

Student guide

Stephen Waring came up with a great idea.

All sorts of people would like to hand over the care of their lawn to someone else.

His business thrived and he wanted to make it grow even more - but how to go about it?

Stephen came up with the notion of selling franchises.

The business now treats 50,000 lawns across the UK.

There are 48 people running their own Green Thumb businesses but paying Stephen for the right to do so and for the materials he supplies.

Just think...

Why did Stephen decide to sell franchises rather than run a business which employed people to look after all those lawns?

Why do you think people buy the franchise instead of setting up their own lawn care businesses?

Big business

In every high street there are franchises.

McDonalds, The Body Shop and Printfast are just some examples.

The amount of money that you have to put up to buy a franchise will depend on:

The start up kit the company supplies

The likely return on your investment

The number of people who want to buy a franchise

A Green Thumb franchise costs �30,000, compared to �120,000 for a Snappy Snaps franchise.

Just think...

Why do you think there is such a difference?

Do you think a McDonalds franchise costs more or less than Snappy Snaps?

A risky business?

All businesses are risky.

Some are more risky than others. Plans that look good when the economy is booming can suddenly look very sorry for themselves when uncertainty sets in.

Buying a franchise is one way of reducing the risk.

You are responsible for knowing the local market for the product but the franchisor will be doing national marketing and keeping the product and image up to date.

They can do things that you couldn't dream of as a small business.

Keep your eyes open for marketing campaigns for well-known franchises.

Could a local burger bar negotiate with the latest movie to use its images or give away model characters with every burger?

The fact that banks are happier to lend to someone who is buying a well-known franchise rather than someone setting up their own business, shows that the risk is lower.

Banks really don't like risks.

A strategy for growth

Running a business that treats 50,000 lawns would be a complex affair.

How many people would you have to employ?

Stephen is aiming at 1,000,000 lawns. Think how complex that will be.

People, offices, vans and lawn movers to maintain, etc...etc...

By selling franchises, he hands over responsibility for all these things to franchisees.

He is now in the business of selling franchises and looking after the franchisees.

He only gets a cut of every lawn that Green Thumb looks after but his costs are much lower than if he ran a huge business that cut lawns itself.

He has to be sure that the franchisees are reliable. If Green Thumb gets a bad reputation because people don't turn up to appointments or turn lawns yellow instead of green, his business will start to wilt.

It is really a two-way arrangement:

A franchisor must provide good, reliable support.

If supplies don't turn up when ordered, a local business will be unable to provide a good service.

If the central business takes its eye off the market and doesn't move with the times, the local business will be left behind.

The franchisee must run an efficient business which meet the standards of the big organisation. There are opportunities to show your flair but in a more secure environment.


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