Three Reasons Why Now Is The Time To Buy a Franchise
Thinking of buying a franchise?
You’re considering buying a franchise. You’ve been told it’s a sensible option with lots of potential and support, and you’re investigating various sectors. But perhaps you’re not sure if now is the right time.
After all, we’re in a continuing era of political and economic uncertainty with Brexit looming on the horizon. And if you’re going to make a commitment, you need to be confident it will be a success.
Sarah Marsh from MagiKats maths and English recently considered the three main reasons why, even now, buying a franchise is a sensible choice.
- A robust business model in uncertain times
You probably recall the financial crisis of 2007-10. It was a painful time for business, with many starts- ups going under and with small businesses taking a battering. But not in the world of franchising.
Research from the BFA./ Nat.West Franchise Survey in both 2011 and 2015 demonstrated that, even during tough economic times, franchises not only survive, but in many cases, thrive.
The case for buying a franchise in the private tuition sector is even stronger, with 1.6 million customers in the UK alone in 2015, and significant growth in demand, year on year.
But what of our experience here at MagiKats?
Our experience matches the overall trend of both the franchise and the private tuition industries.
In fact, our experience has been, that in times of economic uncertainty and as job markets tighten, parents see an even greater need to secure the best possible future for their children via good, strong education.
- Robust systems
The success of the franchise during uncertain times shouldn’t be a surprise. Anecdotal evidence about the success of independent “start-ups” in the first five years of trading normally estimates a failure rate of 80% to 90%. By comparison, the percentage of successful franchises over a similar 5-year period is in the region of 90% - the complete opposite story!
At MagiKats, with decades of experience in education and having run our own Tuition Centres for over 10 years, we have all the experience that a franchisee needs. Our strong business model developed over the years provides comprehensive training, including in marketing, sales, technology, training, operations and support.
The banks are also supportive of franchise investment and MagiKats, having accreditation with The Franchise Alliance, can provide access to Government funded start-up loans for the right applicant. The Franchise Alliance supports each applicant with business planning and financial forecasting to successfully obtain funding with The Start Up Loans Company.
The real success secret lies with the personality of the franchisee and that of course doesn’t change whether it’s economic boom or bust time! You can make a very reasonable income quite quickly with one of our franchises. But that requires hard work, determination and the right attitude from the franchisee.
- Low overheads
Start-up costs vary enormously as do ongoing financial commitments. Depending on the sector and precise business model, you could expect to pay anything from £5,000 to £50,000 with training provided in the US and / or a requirement to have permanent business premises.
At MagiKats the initial investment is £12,000 and you’ll probably require working capital of approximately £4 - 5,000. But you only need 15 to 20 students to break even and that should be achievable within 4 to 6 months.
Three of our franchises that have opened recently, broke even within 3, 4 and 7 months respectively. Our centres with an average of 50 enrolments can earn over £21,000 per year before tax. Double that and the profit is over £50,000.
With low start- up costs, low risks and the potential to achieve a healthy turnover within a reasonable period (while learning valuable life skills), it makes a franchise a bit of a no brainer option.
Add in the franchise industry’s healthy resistance to economic change and the continuing growth of private tuition, the challenges faced by our national education system and our own impressive growth, the right time to buy a MagiKats franchise has to be now. Otherwise you may find they’ve all been snapped up.
Want to know more?
This article was created based on a more detailed article published on the MagiKats blog in February 2018. You can read it here.