Franchising for success: Can small businesses follow Starbucks’ strategy?

Big brands such as Starbucks have made headlines recently with plans for further UK expansion.

Like many businesses, Starbucks has been facing challenges across supply chains, with higher energy bills, and increasing staffing costs, yet Starbucks aims to open 100 new cafés in 2023. Its strategy for growth is many of these café’s will be run as franchises.

This is just one example of a growing trend in those using a franchise model to expand their business.

So why is franchising out so well suited to the current economic climate? Our senior commercial solicitor and franchising expert, Liz Appleyard, explains:

For businesses of all sizes, franchising is an attractive way to build on the existing success of the brand at reduced cost. Each franchisee is in business on their own account, taking on the costs and risks associated with running the franchise business. This covers premises, staff, and costs of supply, meaning the risk of running the business is the franchisee’s to manage.

Franchising your business means you will be able to grow your UK footprint while reducing risk and costs as these are passed on or shared with the franchisee. In fact, the more successful your franchisees are, the more money you as a franchisor will make as a result of monthly fees calculated (usually) as a percentage of the franchisee’s revenue. Yes, the franchisor will need to recruit, train, and manage the franchisee network but this is relatively low cost compared to traditional owner-managed expansion.

If you’re interested to learn more about the process, see our guide to making your business a franchise.