Should You Buy a Recruitment Franchise?

When you decide to leave your current employment and start your own recruitment business, there are a number of opportunities available to you. There are a vast array of recruitment franchise opportunities that offer both positives and negatives. Let’s look at the pros and cons of buying and operating a recruitment franchise.

What is a Franchise?

Usually, a franchise is a brand name ‘business package’ bought to be run as a business under the guidelines of an established business. For a certain start up fee (which can run into tens of thousands, although recruitment franchises tend to range between £3,000 and £10,000)

When you choose to buy a franchise, you get a number of items to allow you to set up your business in the way that the franchise company sees fit. You will now be called the ‘franchisee’ and the company is the ‘franchise company’. Although difference franchise companies vary as to what they expect/order their franchisees to do, the common belief is that you are buying an already established business so that you do not have to build up your own business from scratch.

These items can include very strict rules for certain practices – from how your business looks (business cards, office layout) to how your business operates (targets, ways to answer the phone).

Pros to Buying a Franchise

You Have a Recognisable Business Name.

You do not have to start your business from scratch as you will already have the support of your franchise company. Assuming you have carefully chosen your franchise company, your business name will be considered positively in your chosen market.

They Will Help With Practical Details

Most franchise information nowadays has a start up package that will include such details as a website, headed paper and corporate literature templates. This can be very helpful in the early days of your business.

You Have Hot Line To Help!

Recruitment franchise companies usually have a phone number that you can call for any reason – checking a contract detail, asking employment law advice or perhaps just a friendly voice to talk to.

Cons to Buying a Recruitment Franchise

You’re Not Really Your Own Boss

Much as the recruitment franchise will try and tell you otherwise, if you buy a recruitment franchise you will not totally be your own boss. If this is one of the key reasons you are looking to start your own recruitment business, perhaps the franchise option is not the route for you.

You Have To Pay Upfront

Most recruitment franchises expect you to pay an upfront fee to ‘buy’ your agency. This can be a lot of money – up to £20,000 although usually around £5,000. So yes you are gaining some start up help for your money, that money could go a long way if you were truly your own boss.

They May Take a Cut of Your Placement Fees

This is very common practice, perhaps around 10 to 40 per cent of your placement fees. This may seem like a good deal compared to the likely 80 per cent that you currently hand over as a recruitment agency employee, but nothing like the 100 per cent if you were your own boss!

The Benefits from the Early Days Soon Wear Off

OK, let’s accept it can be really helpful to have a number you can call for advice at all ours in the first few months of running your agency and that it saves a lot of headaches not having to find a web designer or a graphic designer. But really, how hard is it? Worth the start up fee and a cut of all your placements?