Franchising is a great way to get into business for yourself, but not by yourself. From a full launch package, everything you need and ongoing support, franchising is a well-supported way of entering business ownership. Often referred to as a “business in a box”, franchising enables entrepreneurs (or aspiring entrepreneurs) to purchase the rights to trade as an already proven business model, and setting up the business in their own area. Franchising can be applied in the sense of starting up a new business under a proven brand name, or it can apply as a rebrand to an already trading business, such as a hotel or auto garage.
But there are a number of types of franchises which are referred to in the franchising world as “white collar franchises”; what are they, how much do they cost and should you invest in one? Let’s find out.
What are White Collar Franchises?
White collar franchise is a term given to a number of different types of franchises that operate in an executive capacity. Collectively, a white collar franchise would be regarded as any business that involves the franchisee and/or its workers, working in a professional environment. White collar franchises may even be run from home, because management franchises are often considered white collar businesses too. Management franchises are white collar because professionally the franchisee is managing a workforce, ensuring the smooth operation of the business and will be involved with recruitment, finance and office based tasks. This is opposed to the franchisee operating the business in the field, for example oven cleaning, which wouldn’t be considered white collar.
Generally white collared franchises will be anything from B2B franchises, management franchises through to consultancy, finance, IT and recruitment. White collar is historically considered shirt-and-tie work in an administrative setting, but with the rise of home based working; the former is eradicated for the most part.
How Much Do White Collar Franchises Cost?
White collar franchises aren’t always cash positive from day one and in many cases you will need working capital in addition to the initial investment. By now you probably know that franchise investment will vary greatly depending on the brand, the franchise package and the training provided. And this is no exception to white collar franchises, which will usually cost from £10,000 up to £80,000. You should also know that banks and much business favour franchising and are often able to lend a reasonable lump of the investment, paid back over a number of years. This figure can be up to 70% of the investment, and can really help to kick-start entry into business ownership for many entrepreneurs.
As mentioned just now, you’ll usually need working capital for white collar franchises. Why?
- If the business is a management one, you’ll need to source staff and pay wages until breakeven point. Wages for workers doesn’t come out of your investment; you’ll be paying these ongoing out of your working capital, as the profits of the business rises until the point which you’ve made back your investment and spent capital.
- Business consulting and B2B franchises will involve meeting with clients. Not all aspects of the business can be done remotely. Therefore, travel expenses and accommodation will come out of your working capital.
Are Management Franchises White Collar?
Yes – management franchises are white collar franchises. You will be managing a team of workers that carry out the nature of the business (for example cleaning), but you won’t be doing any of the field work yourself. They are white collar in that your role will be sourcing, recruiting and managing staff, managing finance, marketing and training. This is mostly office based work and whilst it can be done from home, it is still considered executive, professional and white collar.
Things to Consider When Investing in a White Collar Franchise
Depending on the size of the business, you’ll need to scale your working capital accordingly. You need to make sure that you have a good amount of capital, at least £50,000 to be on the safe side, scaling this figure upwards with the number of staff you plan to employ. Work with the franchisor to get an understanding of profits and losses and you can use this to predict when you will break even and how much working capital you’ll actually need. Franchise finance is there to ease some of the initial cost, but you need to ask yourself if you’re getting financial support for the investment, can you afford to accumulate the working capital as well; to keep the business afloat for 6-12 months maybe even longer.
Five Reasons to Invest in a White Collar Franchise
If you’re considering going into business ownership, you can either go one of three ways; start a business up, buy an existing business or franchise, or start up business as a franchisee via the franchising route.
- Starting up a business comes with a lot of risks but done properly it enables complete flexibility, unlocking greater work life balance.
- Buying an established business too comes with risks, yet it does give you flexibility but comes at greater expense. Beneficially buying a business is a turnkey route with positive cashflow from day one.
- Franchising combines the above. It gives you the enjoyment of starting up a business from scratch – ie, the franchisee will be setting up a business under the franchisor’s brand in a new territory, delivering sense of adventure. It gives you flexibility in that you’ll enjoy a better work life balance as a business owner. Franchising isn’t employment and you will have responsibilities as a business owner, but you’ll have the pleasure of being in control of how far you want to go to achieve.
Here are five reasons to invest in a white collar franchise business…
1. Franchising is a Fully Supported Industry
If you were to set up a business alone, you’re doing just that. Starting up a business without any track record, you’re jumping straight into the deep end. That’s not to say starting a business from scratch is dangerous – done properly it can be incredibly rewarding and obviously, all franchises had to start out as a single unit anyway. But with franchising, you’re avoiding many of the risks associated with starting up a business because you’ve got the support and guidance of many. The franchisor will be able to offer you complete training – everything from finance and administration to recruiting staff for your white collar business. If your white collar franchise requires premises, many franchises will provide you with support when it comes to choosing a location as well. They’ll help you launch the business and either as part of the investment or a separate fee, help you with launch marketing.
Franchisor support aside, many franchises are members of the British Franchise Association which is the UK’s trusted self-regulatory franchising body. Members of the British Franchise Association are thoroughly checked for franchising viability and that includes complete checks of the necessary franchising documentation. Not all franchises are a member of a franchise association, but those that are can usually be considered a more reputable investment.
Not sure what a franchise association is? Discover what is a franchise association.
2. Funding Assistance is Available
With franchising, you won’t be jumping into the deep end when it comes to finances either. Just as much as that franchisors are eager to expand their network, they’re eager to ensure that franchisees are well suited and financially capable of being a part of it. Franchisors of a trusted franchise (like one that is a BFA member) won’t progress you as a franchisee unless they feel you’re financially capable of running a business. The white collar franchisor will assess whether you are able to finance the investment and whether you are able to raise the required working capital if applicable.
You must be able to fund the franchise investment yourself, but you don’t necessarily need to actually pay for it, for you can get up to 70% bank funding for a franchise subject to your financial history and a good business plan. If you can’t fund the investment yourself, you’ll need to ask yourself can you afford the working capital and keeping the business afloat. A reasonable scenario for franchise that costs £20,000, get 50% bank funding (paying £10k yourself) and then allocate the remaining sum into working capital and marketing.
Let’s not forget that banks aren’t the only way of funding a franchise. Whilst banks highly favour franchising over the start-up counterpart, so do many lending businesses – many of which work within franchising and are members of the BFA.
A BFA registered franchise + a BFA registered lender/bank + N = success. The only thing missing from this equation of success is your determination and drives to succeed.
3. White Collar Franchises Offer “A Business in a Box”
A statement true of any franchise; franchising offers a business in a box. You’re buying the trademarks and the rights to trade as a proven, established business model, plus the operational documentation that makes that business “work”. In exchange for the investment, the franchisor will provide you with everything you need – from software to shop fitting if needed.
In the white collar industry, partners and suppliers are key to the franchise network’s success, and you’ll be granted access to use the suppliers of the franchise network. A benefit of this is greater purchasing power on products and services. Franchisors ensure the entire franchisee network use the same supplier and in exchange for their service, the supplier offers discounted rates. Something single unit businesses cannot get access to – because they don’t have anything to give in return.
4. White Collar Franchises are in Strong Demand
One big reason to consider a white collar type of franchise is the fact that most are in constant demand. Let’s go over some examples
As well as being recession proof franchises, cleaning and management businesses are resilient because clients can either be from a domestic or commercial setting. Commercial businesses continue to operate throughout times of economic stress, often choosing to outsource cleaning rather than employ cleaning staff.
Accounting and Finance Franchises
Many businesses look to outsource their accounting and finance, even during times of economic challenge. It saves overheads internally within the business, and it takes a lot of stress out of doing it internally as well. You can expect strong demand for accounting and bookkeeping franchises which are really lucrative. Just be sure to choose a franchise with a strong brand name and do your due diligence.
B2B Consultancy and Training
One of the most lucrative of the different types of B2B white collar franchises, consultancy and training plays an important part in ensuring a workforce operates seamlessly. Business coaching is often a popular choice amongst businesses that either struggle or are looking for cost reduction or employee motivation. Whilst this sort of sector can sound like hefty stuff, franchisees are trained in all aspects of the business.
5. You Can Later Sell Your White Collar Business
A business will build up reputation as time goes on. As well as being a recognised brand name, the business will also establish a local presence. Franchise units can usually be sold for a lot more than what the franchisee initially paid, because a price is put on the hard work the owner has put in. Selling a franchisee’s business is called a franchise resale.
So – Should You Invest in a White Collar Franchise?
Many people ditch employment because they want to lose the commuting and lose the office based working lifestyle. Some white collar franchises retain these elements, so they won’t be for everyone. There will occasionally be commuting to visit clients. There may also be some office based work if your white collar business operates on premises.
But the plus side to all of this, is that if you’re willing to put in the work, some of the most lucrative franchises are white collar. B2B is a very lucrative sector, so at the expense of retaining an office based working lifestyle, you have the potential to build a considerable asset. Don’t forget, many white collar franchises such as management can be run from home. If it’s something you’d enjoy, you’re bound to make it a success.
White Collar Franchises FAQ
Any business is profitable provided you make the efforts to see the business to success. White collar franchises are profitable because they cover a lot of lucrative business types, from finance and B2B to managerial style businesses.
White collar franchise businesses will either be premises, office or home based. White collar covers a lot of different business types – from cleaning to finance, so working style will vary between businesses.
White collar franchises cost anywhere from £15,000 up to six figures. Banks can usually lend a reasonable figure of the investment.
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