Introduction to Franchising
Business franchising involves an established business (known as the franchisor) allowing a third party (known as the franchisee), to trade as their own businesses under the franchisor’s brand. This licence is usually granted on the condition that the franchisee pays the appropriate fee to the franchisor whilst following its standard business model. The franchisee will usually also receive training for key staff, ad hoc assistance with operational matters and centralised marketing.
Franchising is a continually growing market. The British Franchising Association (BFA) reported that at the date of its most recent survey (2018):
- 93% of franchisees claim profitability and less than 1% of franchisors close each year due to commercial failure
- 60% of franchised units turn over more than £250k per annum
- Franchised businesses turnover £17.2bn (with average growth in the market of approximately £1bn per annum)
- Franchised business employed 710k people and
- Lots of franchisees experience growth in their franchises, with 36% of franchisees now running multiple units.
The market research carried out by BFA proves that franchising is an effective and profitable method of establishing a business. The operational business support and the benefit of franchisor’s economies of scale significantly reduces the risk of business failure, mixed with the scope for rapid growth into multiple units contributes to the ever growing franchise market.
Franchising has numerous other advantages over starting a new business, including:
- Proven business model and ongoing support
A franchisor will provide operations manuals detailing the know-how and business techniques used to run a successful franchise. Additionally, a franchisor will usually provide ongoing guidance and training to the franchisee on general business or management skills, or the requisite industry specific knowledge in relation to the business. This will prove useful to a first-time business owner.
- Trading under an established brand name
A franchisee can take advantage of the franchisor’s pre-established name and reputation. This will significantly reduce the lead time in making a business successful and reduces the franchisee’s working capital requirements.
- Increased availability of finance
Franchisees may be able to benefit from more readily available finance and obtain that finance at a higher borrowing ratio than individuals setting up their own business. Most banks have dedicated franchise departments. The lower risk of business failure with franchises increases the likelihood a bank will lend to a franchisee and may also increase the sum the bank is willing to offer. Depending on the how established the franchise is, banks may be prepared to lend two or three times the amount to a franchisee than to an individual starting their own business.
- Economies of scale
The franchisee may benefit from the franchisor’s purchasing power and size in reducing the overall unit costs in supplying goods and services.
- Shared advertising and marketing budget
Franchisees will usually benefit from a shared advertising budget with other franchisees and the franchisor. Additionally, the franchisor will usually undertake its own advertising (sometimes on a national scale) to increase its brand.
Joel Gocool specialises in advising on and negotiating franchise agreements. Joel has a wealth of experience in identifying the key considerations a franchisee should make before starting a new franchise venture. If you require advice on franchising, please contact Joel Gocool on 01276 686 222 or at Joel.Gocool@Herrington-Carmichael.com.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.

Joel Gocool
Solicitor, Corporate and Commercial
Sign up
Enter your email address for legal updates on Corporate and Commercial law.
Latest Articles
New JCT forms of building contract, 2024 Editions expected soon
The JCT announced at an event on 16 June 2023 that new editions of its contracts will be published in 2024.
Sold to an EOT – Who can be a trustee?
When you’re selling your shares to an Employee Ownership Trust, thought will need to be given to how the trust will be run after the sale has completed.
Selling your business – is an EOT the answer?
You may have heard of EOTs, and how they are an option for business owners to realise the value of their business.
Register of Overseas Annual Update Statement
For any overseas entity which has registered on the Register of Overseas Entities, it’s soon time to file their first annual update statement.
Reducing risk by conducting a Commercial Legal Audit
In the fast-paced business environment a company may experience challenges which could ultimately lead to legal risk.
The UK-Australia Free Trade Agreement and Government Procurement
The UK and Australia’s economic ties are set to become even stronger with the recent signing of the UK-Australia Free Trade Agreement.
Award winning legal advice
Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2023’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.








Email: info@herrington-carmichael.com
Farnborough
Brennan House, Farnborough Aerospace Centre Business Park, Farnborough, GU14 6XR
Reading (Appointment only)
The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA
Ascot (Appointment only)
102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY
London (Appointment only)
60 St Martins Lane, Covent Garden, London WC2N 4JS
Privacy Policy | Legal Notices, T&Cs, Complaints Resolution | Cookies | Client Feedback | Diversity Data
Our Services
Corporate Lawyers
Commercial Lawyers
Commercial Property Lawyers
Conveyancing Solicitors
Dispute Resolution Lawyers
Divorce & Family Lawyers
Employment Lawyers
Immigration Law Services
Private Wealth & Inheritance Lawyers
Startups & New Business Lawyers
Please be aware that we have no plans to change our bank details. If you receive any indication that any of our bank details have changed please contact us before sending us any funds. We take no responsibility for monies you transfer into the wrong bank account.
© 2023 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.
Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.