Jeff James, Editor of What Franchise, explains how security franchises work and the key benefits installers should consider over ‘going it alone’.
Security franchises give expert advice to commercial and residential customers about how to protect their homes and properties. Effective security and safety solutions are a necessity for the 29 million homes and 5.5 million small companies in the UK, meaning the services of a security franchisee are in constant demand, while the potential for repeat business is high.
Franchisees provide locksmithing services, fit alarms and CCTV systems and install and maintain fire extinguishers, emergency lighting and access controls. Some security franchises offer a 24/7 emergency service and can even repair damage to properties in order to make them secure.
Franchisors in this sector give their franchisees everything they need to start and run a successful business, allowing them to trade using the company’s brand, systems and know-how.
Some security franchises are management opportunities, meaning your main task is to run the business and oversee the team delivering the products and services. Others require franchisees to adopt a hands-on role, essentially running a one-person operation, which can be developed into a management role if desired.
On top of this, installation and maintenance contracts for items such as fire extinguishers and security and fire alarms can provide an additional income stream.
Statistically, you are far more likely to build a successful business as a franchisee than if you started your own independent security company.
According to the latest British Franchise Association NatWest survey, franchise failure rates are very low, with less than 1% having to close because of commercial failure. In contrast, approximately half of all non-franchised start-ups fail within five years of opening.
Investors are attracted to security franchises because they give them a chance to be their own boss safe in the knowledge that they have the backing of an established brand.
Key benefits of buying a franchise include:
The beauty of franchising is that, in many cases, you don’t need any previous experience of the industry you want to become part of because the franchisor will provide you with all the training and support you need to set up in business.
However, successful security franchisees need to be self motivated, physically fit, good with their hands, well organised, resilient and have good people skills. Franchisors also expect franchisees to follow their proven system.
This depends on the amount of time and effort you put into your business and your aptitude for following the franchisor’s methods of operation.
British Franchise Association statistics reveal that 93% of franchisees are profitable and 60% turn over more than £250,000 per year, so the potential to build a lucrative business via the franchise route is high – though obviously this is dependent on the sector, too.
In addition, many security franchises can be run from home, which means overheads will be lower than if you had a premises-based business.
Independent research – also called due diligence – is vital before you buy any franchise.
Check out the company’s track record. How long has it been established and who’s behind the brand?
Is it well established in the security sector or a new entrant? Is the franchise’s market share growing or in decline? What is its unique selling proposition? What is the franchisor’s plan for the business during the next five years?
When it comes to the franchise itself, identify exactly how much it costs, including working capital requirements and ongoing business management and marketing fees charged by the franchisor.
Also, be crystal clear about what you will get for your investment. A detailed breakdown of the full franchise package should be given to you by the franchisor.
Find out if any franchises have failed and why. Buying a franchise isn’t a guarantee of success and it isn’t unheard of for franchises to close from time to time. But you need to have as much information as possible at your fingertips before you make a commitment.
Get any information about earnings potential checked out by an accountant and have the franchise agreement reviewed by a suitably qualified lawyer.
Talk to as many existing franchisees as you can about their experience of running the franchise. The franchisor should give you a full list of them.
Only when you have as much information about the opportunity in your possession as possible should you decide whether the franchise is right for you.
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