What is a Management Franchise and Should You Invest in One?

If you’re looking to take control of your career, business ownership is a great way to go about it. There are many benefits of owning and running a business and franchising enables you to take advantage of these all while benefitting from training, support and avoiding many of the mistakes associated with starting up a business alone. There are many different types of franchise opportunities in the UK. From landscaping and gardening to property and estate agency – generally if a commercial business can trade successfully, it can likely be franchised.

Franchising has a much higher success rate when compared to starting up a business alone. In fact more than 90% of franchisees claim profitability and less than 1% claim to have failed due to commercial failure. These figures are from the 2018 bfa Natwest survey.

Covered in this article, we’ll explore what a franchise is, what management franchises are in particular (with examples), plus we’ll take a look at top ten reasons to consider investing in a management franchise UK.

What is a Franchised Business?

Franchising is where a business owner will make their business model and brand scalable, enabling franchisees (entrepreneurs who purchase the rights to trade as) to operate the business in their own area. This is in contrast to other methods of expansion where additional units are opened at company expense (for example supermarkets). With franchising, the franchisee purchases the rights to trade as the business in their own exclusive territory. A good example of a well known franchise would be McDonalds, whilst others include Dial a Dog Wash, Wiltshire Farm Foods and Time For You cleaning.

In exchange for the initial investment, the franchisee will get a comprehensive business launch package. This is why franchises are often referred to as a “business in a box“. Franchisors will in exchange for the investment, provide franchisees with their necessary starting equipment, starting stock (if applicable), launch marketing, training and support. This is why franchises are usually preferred over starting a business up from scratch. Because you get everything you need, without reinventing the wheel, all while benefitting from a proven brand.

Many franchising websites, franchise associations and franchise directory portal sites will refer to different businesses as “management franchises”. But what are management franchises and how do they work? Let’s find out.

Management Franchises – What Are They?

“Management” is a name given to a range of different types of franchises which refers to the style of working that the franchisee carries out. The opposite to a management franchise would be considered a hands-on operator.

Management franchises are any type of business where franchisees employ staff to carry out B2B or B2C related activities, rather than the franchisee doing the work themselves. As a franchisee within a management business, you’d either operate from an office or your home, managing a workforce who serve your clients.

The main benefit of a management franchise is the ability to operate, scale and run the business with fewer personal constraints. Franchisees which operate a management franchise may not need any experience in the nature of the business (eg cleaning, care), just the enthusiasm to manage a team. While franchisees may not need any business ownership or management experience, it is beneficial.

What Types of Management Franchises Are There?

Not all types of franchises can be run on a management basis because some business models are designed to be run by the franchisee. The franchisor will have designed the franchise and operations manual in a way that ensures profitability so it shouldn’t be deviated from and if a franchise is intended to be run as a solo operator, it should so be done. But on the other hand, many franchises can in fact be run as management style, if not intended to be. Let’s take a look at some of the top types of management franchises for sale.

Cleaning Management Franchises

Cleaning franchises are probably one of the most widely recognised industries as being operated on a management basis. And whilst cleaning franchises do enable the franchisee to run the business on a cleaner operator type working, management is the most popular. Cleaning as management franchises is popular because not only does the franchise usually offer low investment, it also enables the franchisee to have a hands-off approach.

As a management type business, the franchisee can choose to upscale the workload and increase turnover, by taking on more cleaners and more clients. This simply wouldn’t be possible as a self-operated business, as there are not enough hours in the day. You would need to employ cleaning staff once earnings and workload limit has been reached.

A cleaning franchise which would likely not be a management one, would be an oven cleaning franchise. Oven cleaning franchises are typically owner operated. Usually there is sufficient demand for oven cleaning in a territory to make the business successful on a solo operator basis, but where employing cleaners as a management type operation would result in unnecessary overheads and costs.

Tuition Franchises

Tutor and Tuition franchises are another good example of management franchises. The franchisee does not necessarily need to have any teaching experience themselves. Franchisees will employ a number of tutors, each of which will serve clients in the franchisee’s territory. How many tutors the franchisee employs is up to them. More tutors will equal more clients and better turnover for the business. Because management franchises enable the franchisee to scale their workforce, the franchisee has great control over their own workload as well. Fewer tutors offers less workload, ideal for a part time business and less overheads. Some franchises may employ a minimum turnover per month so there will usually be a minimum number of tutors you must employ in order to keep ahead of franchise royalty fees.

Not all education franchises are run on a management basis. Some education franchises will require a premises and there are a number of maths and english franchises out there. But for tuition, these are most commonly operated on a management basis. Tuition is often in high demand across the country and is a highly profitable franchise sector so regardless of whether a franchisee runs the business management or owner operator style, turnover can often be very high.

Home and Domiciliary Care Management Franchises

Our third and final example of management franchises is home care. Franchisees usually need no healthcare experience, but determination and enthusiasm is a must, with team leader experience often necessary to ensure the business is run effectively. Because franchisees manage a team of carers, good organisation is important. Because franchisees don’t need any past healthcare experience, care management franchises are usually very popular because care is in constant growing demand. Demand for home care services is always on the rise.

Home care management franchises are where the franchisee will purchase the rights to trade as the franchisor’s brand in their own exclusive territory, before employing a team of carers and finding clients. The main role of the franchisee will be to find carers, find clients and effectively market the business. Ensuring carers have sufficient work will be the responsibility of the franchisee or an office team. One of the most recognised management, home care franchises in the UK is Home Instead.

Should You Invest? Ten Reasons to Invest in a Management Franchise

Here are our top ten reasons to invest in a management franchise. Whilst you could set up a management style business yourself, there are many reasons to go down the franchising route instead.

1. Management Franchises Expect Less Hands On Involvement

As emphasised already, management franchises require a lot less hands-on involvement when it comes to the nature of the business. Because of this, management franchises can apply to a much greater demographic.

• Management cleaning franchises for example, won’t need franchisees who are physically fit enough to carry out property cleans.
• Home care management franchises won’t require franchisees who have strong qualifications in healthcare. As a franchisee, you’ll enjoy making a difference in your community whilst carrying out tasks from an office or your home.
• And tuition franchises won’t require any teaching experience from the franchisee, it will be employed tutors serving the students.

Your role may not necessarily be confined to your home either. Many management franchises enable franchisees to meet and interview clients, combining the luxury of a flexible business with just a little bit of commuting to give it that work-y feel, but still knowing you’re not an employee. This gives you better flexibility and a better work life balance, which we’ll look at in more detail next.

2. Better Flexibility and Work Life Balance – Be Your Own Boss

Not just franchising but being your own boss is widely renown for offering a better work life balance.

Franchising isn’t employment, and you do get the flexibility of being your own boss. It’s worth noting that not all franchises will allow for franchisees to run the franchise part time. Some franchises do require full time commitment, at least in the early stages. Obviously the more effort you put in, the more you’ll take out, but being your own boss with a management franchise typically does offer a better work life balance. Simply because you’re not the one doing the hands-on work. Provided that the business gets marketed, and provided your workforce have sufficient work and clients, it really shouldn’t matter when the work gets done on your end.

In some franchises, the client-worker booking process may even be automated. In the instance of a cleaning franchise for example, franchisors may provide you with a CRM system where you can assign jobs to specific staff X number of days in advance, or some advanced franchises might completely automate the process where a client books a job and it is automatically assigned to a cleaner. In the same manner this may work for home care franchises too. Although with the latter this will often be the role of an office team to process work for carers. That said, with an office team in place, the work required of a franchisee ends up purely business oversight.

Management franchises and home based franchises both typically offer better flexibility than a more hands-on franchise business like a coffee shop or a recruitment business.

3. Usually Lower Investment but Overheads Can Be Higher

Therefore a business plan comes in very useful.

If you’re looking for a business that has minimal upfront initial investment, management franchises are usually a top choice. But while the initial investment may be low, overheads can be high. You will need to ensure you have plenty of working capital aside for recruiting your workforce who will do the hands on work. While overheads will be higher, and they will be higher with the more staff you employ, you should remember that the more workforce you take on and the more clients, ultimately the rewards will be higher too. So you’re benefiting from a low investment, with high returns. Just make sure you have enough capital to keep the business stable whilst you recruit cleaners and clients in the early stages.

Because there is reduced hands on involvement, management franchises will often be home based. This in itself cuts a lot of costs considerably. All you really need is a laptop and a phone.

4. Become a Part of a Proven Business Model

When you set up a business from scratch, your reputation and brand awareness is nil. Nobody has heard of your brand and to get that reputation up within your community will take considerable time. Even with a good SEO technique, getting your business website to rank will take months, if not years. It’s impossible to predict how much you’ll spend on online marketing. Google My Business and local search campaigns can help, but they will be expensive if not done properly.

Buying an existing business for sale, or buying into a franchise, whichever you choose, you benefit from near-immediate brand recognition. Franchisors will, in exchange for the initial franchise investment and an ongoing management service fee, provide you with marketing either on a national or local scale. With most franchises, local marketing will be done by you while national marketing will be done by the franchisor in exchange for said monthly fee (sometimes referred to as a royalty fee). You’ll need to speak to the franchisor about what marketing support they provide.

Being a part of a proven brand and proven business model means you’ll benefit from existing knowledge of that brand. Reputation built up by existing franchisees has a positive impact on the entire network and because solo startups and individual businesses don’t have a franchise network contributing to a group marketing fund, they’re usually unable to afford (or benefit greatly from) more effective marketing techniques such as TV campaigns and national newspaper ads.

Being a part of a proven business model has its perks because new franchisees immediately garner the reputational weight the brand carries. From an SEO perspective, franchisors will typically set you up with a website and social media posts to send your business skyrocketing from day one. Thereby not having to wait for SEO to kick in for an otherwise new and lack of authority website.

5. Benefit from Group Purchasing Power

Franchise networks generally use the same partners and suppliers. All franchisees will tend to use the same supplier and sometimes this may even be compulsory. The benefit of this is group purchasing power. A two-way street, a franchisor making all franchisees use the same supplier gets the supplier a good amount of business and in return, offers said franchisees a competitive rate on their services or products.

If you were to start up a business alone, you’d need to find a supplier and even then they wouldn’t give you huge discounts or savings. The group purchasing power of a franchise network is greater the more franchisees a network has. These agreements benefit both parties and as a solo start-up you won’t have much business for them in contrast to what a franchise network would have. This is why they’re more favourable to provide better rate of services to a franchisee.

On the whole, franchise networks which benefit from increased buying power can ultimately save on these products and from this even offer their own services at a better rate. In turn this can win over local competition by offering better priced services compared to a solo local business. Yes this can negatively impact local businesses because the franchisee may be offering a better rate, but this is simply illustrating the benefits of franchising.

6. Everything You Need is Provided For The Investment

Thinking about some of the types of franchises out there, a lot of them require either equipment to run the business, or an initial stock of products, materials or merchandise. When you invest in a franchise, management or not, the investment will provide you with at least the very minimum of what you need to get the business off the ground and trading. In the cleaning example this might include flyers, help recruiting staff and initial stock of cleaning products. With the tuition franchise example, you can’t expect tutors to have their own books and teaching materials. Someone will need to supply syllabus relevant material and that is likely to be the employer – ie you – the franchisee. The franchisor will likely provide you with this, or at least their suppliers because ongoing this is what your working capital will pay for.

If you were to have gone it alone, where are you going to find those suppliers? And at a competitive rate? Where are you going to get cleaning products? Surely not a few bottles of Mr Muscle from ASDA. Franchisors have agreements in place with suppliers to provide products, equipment and services at a competitive rate – known as group purchasing power as discussed in point five above.

7. Franchising is Well Supported

Franchising is a very supportive sector. Franchisors provide their franchisees with all of the necessary training and support to launch the business, while both franchisors and franchisees have a wide array of support contacts as well. For the franchisor, franchise consultants are eager to help ensure a franchise network operates as seamlessly as possible and that franchisees are well suited for the network. Support for the franchisee ranges greatly. Franchise consultants are eager to help on behalf of franchisors, and there are many specialist franchise lawyers and solicitors out there to help both parties with documents such as the franchise agreement.

Almost every country in the world has a franchise association too. The UK’s most trusted franchise association is the British Franchise Association and through a network of members, the self regulatory body helps everyone involved with franchising – from banks to consultants and those looking to become a franchisee. Franchising isn’t government regulated in the UK and so franchise associations like the bfa provide considerable support to the sector.

Let’s not forget that many banks favour franchises over solo startups. Most banks are able to lend up to 70% of the franchise investment, and there are many other companies out there which offer similar arrangements. There are a number of approved finance companies (including UK high street banks) who of which are a member of the British Franchise Association so you know you’re not falling into a financial trap.

8. Scale Your Earnings With Management Franchises

Just like how vending franchises can be scaled (by purchasing and renting out more machines), management franchises can too, be scaled. The more staff you employ, the more clients you take on, the bigger and better the business will be. As a direct result of this, the bigger the business, the more turnover and better your earnings will be. Not only earnings will benefit, having greater reach and maximising the use of your territory can benefit the local economy as well and reduce unemployment.

If you wish to run the management franchise quite small, only a few clients and staff, that is your choice. But regardless of the size of the business, management franchises are usually runnable part-time anyway because of the way they’re run – the staff do the hands-on work, not you.

9. A Range of Different Types of Business Opportunities

Cleaning, home care and tuition are just some of the many types of management franchises for sale in the UK. By making a franchise opportunity management-type operation, the business model can appeal to a lot more prospective franchisees who otherwise lack experience in the trade. In the same manner, job opportunities open up for those that do have experience in the trade but do not wish to start up a business to fulfil their interests. They will work under the franchisee. For example:

• Property Renovation and Home Improvement Franchises do not usually require any physical involvement on the franchisee’s side. The franchisee will employ builders or contractors, or work with the franchisor’s partners and suppliers to deliver services. Kitchen makeovers and some property maintenance franchises like guttering, driveway maintenance and garage door installation can often be run on a management basis.
• Food Ordering and Delivery Franchises are yet another fantastic example of a management franchise. Franchises will usually deal in the marketing and running of the local franchise territory, including employing drivers for delivering orders on a local basis.
• Bookkeeping and Accountancy Franchises won’t usually expect the franchisee to deal with clients. The customer facing function of the business will usually done by employees in a shopfront office or home based environment. It will be the franchisee’s role to employ accounting professionals to work for their franchise.

These are just a few more examples of management franchises. While many other types of franchises can be run as management type operation, in some cases it is more profitable to run as a solo operator. Contact the franchisor to learn whether running a business as a management operation is operationally and financially viable.

10. An Asset You Can Later Sell

Just like any business, a franchise can be sold at the end of the agreement. As a franchisee, if you choose not to continue running the franchise, or you wish to use your garnered experience to pursue other career avenues, you can sell the franchise business and move on.

When you sell a management franchise, the value will usually be considerably more than what you initially invested. Usually you’ll make the investment back, along with a substantial amount of the working capital you invested for your hard work and efforts. Most franchise resales will be sold for a five- or six-figure sum, whilst some well established and well recognised businesses can be sold for seven figures. Whether you want to use this to invest in a new franchise or retire, that’s up to you.

Because management type franchises are usually big businesses – employing numerous staff and serving many clients – management franchises can often be sold for a higher sum than, for example, a solo operator business.

So – Should You Invest in a Management Franchise?

Management franchises probably aren’t for the new entrepreneur. Whilst they offer great earnings and the potential to build a really strong business portfolio, there is still a lot of weight on the franchisee’s shoulders despite a broad oversight role. Employees and clients alike will depend on unquestionable managerial skills. Franchisees should have strong enthusiasm to running a business with multiple staff and potentially hundreds of clients, and for the inexperienced this can be a concern. However if you have managerial experience, love to challenge yourself and savour the prospect of owning a business (maybe you’ve owned a business in the past), a management franchise can be a fantastic adventure.

If you have plenty of working capital, at least £50,000, the low investment associated with many management franchises can be the ultimate temptation. With many banks able to lend up to 70% of the franchise investment, owning that dream management type business could be just a stone’s throw away.

Interested in owning a management franchise? Explore our directory of management businesses and franchises for sale.

Management Franchises FAQ

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