Some people feel more comfortable considering doing what someone else has already made successful

Starting your own microenterprise by replicating an existing business and becoming a  ‘franchisee’ is an excellent way to own and develop your own business, without the risks associated with starting something completely new and it should make your access to any funding needed easier. The main benefits are:

• Copies a successful business

• Reduces the risks of failure during the start up process

• Eases the creative challenges of a fresh start-up because systems are in place.

•  Provides a good  method of transferring technology

• Helps more rapid progress to economic self-reliance Improves access to start up funding

• May provide benefits  in purchasing and advertising.

It is hoped to develop a portfolio of successful microenterprises to be featured on the website as available for franchising. 

The intention is that microenterprises for franchising will not require more than  perhaps  $10,000 for start up and working capital and will be unlikely to employ more than 5 people – most should be suitable for starting by one committed entrepreneur or family.

Starting in this way means you do have to make a formal agreement with the Franchisor and will need to pay them some money at start up and/or from profits

Think About it…..

In relation to any other small business, franchising in the UK has proved to be successful, with 96% of units still operating profitable businesses 5 years down the line. (Only 66% of small firms survive the first 3 years) Franchises are less likely to fail than other types of new small business organisations, but remember that franchising is not an easy option and will require investment of a lot of hard work and money, particularly in the early stages.

At the end of the day, you as the franchisee must be prepared to be realistic. Many franchisees have risked their home, savings and family relationships by investing in business, consumed by dreams of becoming successful business owners. The secret is to err on the side of caution and do your homework very carefully.

YOUR NEED FOR COMMITMENT

When deciding whether a franchise is right for you, you must - first and foremost - look closely at yourself, at your commitment, your expectations and your qualities.

Franchising is no easy option. You will invest a lot of hard work, as well as your money, over long periods of time, often in unsocial hours. You will take your work home with you, and you may take your family to work with you. Either way the stresses and strains will be as much your family's as your own. The first year will be the hardest, or the first two years, or the first three - it all depends as much on you as the franchise.

Cross examine yourself. How much time and financial commitment can you give? What are your expectations? 

Then and only then can you make realistic judgements about a franchise that will suit you.  

BECOMING A FRANCHISEE  

You should take into account the following before setting up your business:

Any relevant experience you may have

Your aptitude for the specific business

Your education, technical qualifications, or any training you have undergone

Market demand for the product

The presence of any large enterprises nearby which might effect your choice of product

The potential profitability of your business

Availability of raw materials and other inputs

Availability of technical know-how and process details

Competition from businesses making similar products

LOCATION

For some businesses, the location is very important. When you are choosing a location, remember to take into account the following:  

You should pick a location close to your source of raw material, and close to the market where you want to sell your product. The location should have a good transportation system. This will cut down your costs when getting your raw materials and when you are taking your products to market. In some areas, there are incentives and concessions available to help set up industries.  

Find out about the climatic, geographical and environmental factors that could affect your industry or the transport system.

FRANCHISING PRINCIPLES AND FEES

A standard Aid for Trade format for the  Offer Document, Franchise Agreement and Operating Manual will be established in liaison with members and will be based on formats adopted as best practice by existing international Franchise Associations.

Subject to further consideration all micro franchisees will pay a fixed fee of $300 ($200 to the franchisor and $100 to Aid for Trade), plus on an ongoing ‘Royalty fee’ of 5% of annual audited profit (3% to the franchisor company and 2% to Aid for Trade).  The fees payable will need to be taken into account when planning any franchise.

For examples of small franchises see: http://entrepreneur.com/lowinvestmentfranchises/index.html

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