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Franchise
A franchise lets you operate a business using a franchisor’s brand and system, but you still need to check the costs, contract and business plan carefully <a href="https://www.xero.com/uk/guides/what-is-a-franchise/" target="_blank" rel="noopener noreferrer">Xero</a>. Costs vary widely: UK listings describe liquid-capital requirements of £15,000–£150,000, while Irish listings include opportunities from €6,000 to much higher investments <a href="https://lexpress-franchise.com/en/" target="_blank" rel="noopener noreferrer">L’Express Franchise</a> <a href="https://www.franchisedirect.ie/directory/" target="_blank" rel="noopener noreferrer">Franchise Direct Ireland</a>.
Open the interactive guide (checklist, video, read-aloud) →In plain words
- A franchise lets you use a business name and work system.
- You pay costs and follow the agreement.
- Costs and rules differ between franchises.
- Ask current owners what the work is really like.
- Get the contract and money plan checked before signing.
Who it suits
Someone with savings or access to finance who wants a structured business model and is prepared to follow a franchisor’s operating rules. It is less suitable if you need a very low-cost start or want complete control over branding and how the business runs.
People may pay for a familiar brand, a set way of working and support such as training. The value depends on the particular franchise, its customers and its costs; a recognised name does not guarantee sales <a href="https://www.xero.com/uk/guides/what-is-a-franchise/" target="_blank" rel="noopener noreferrer">Xero</a>.
Step by step
- Choose the kind of franchise work you want. Think about the tasks you can and want to do, how hands-on you can be, and how much customer contact suits you. Compare home-based, mobile and premises-based options rather than assuming they involve the same workload. About 1-2 hours.
- Set your budget and keep a separate reserve. Work out how much of your own money you can put in without using money set aside for essential living costs. Keep a separate reserve for early business costs, and do not treat borrowing as money you already have. About 1-2 hours.
- Browse listings in the country and area you want. Use listings to find options that match your budget and preferred work style. Treat directory figures as a starting point, not a full quote: listings include UK liquid-capital figures and Irish opportunities with very different investment levels L’Express Franchise Franchise Direct Ireland Franchise Direct Ireland. About 1-3 days.
- Ask for the full start-up budget. Ask each franchisor to list the initial fee, premises or vehicle costs, equipment, stock, working capital and any other set-up costs. Request the figures in writing and ask what could change them. About 1-2 days.
- Check every ongoing charge. Ask how royalties and marketing charges are calculated, when they are due and whether they are based on turnover or another measure. UK guidance describes typical royalties of 5–9% of revenue and marketing levies of 1–3% for some franchises; these are not universal rates Xero. About 1-2 hours.
- Read the agreement before you commit. Check the territory, contract length, renewal terms, required suppliers and operating rules. Find out what happens if you or the franchisor ends the agreement, and have a solicitor review it before you sign. About Several days.
- Talk to current and former franchisees. If possible, ask about their actual costs, workload and trading experience. Ask what surprised them, what support they received and what they wish they had checked before starting. About 1-2 weeks.
- Get independent advice on the figures and contract. Ask an accountant to review the budget and cash-flow plan, and a solicitor to review the agreement. Choose advisers who are independent of the franchisor and give them time to explain their findings. About Several days to 2 weeks.
- Make a cautious cash-flow plan. Estimate sales cautiously and include set-up costs, ongoing charges and early running costs. Proceed only if you understand the risks and can afford the commitment; listings do not show what you will earn or how quickly you may recover your investment Xero. About 1-2 days.
Your first 15 minutes
Choose one franchise listing in your preferred area and request its complete written cost breakdown and draft agreement before making any commitment.
The money
First find out whether the franchisor sets your prices or limits how you can set them. Build your own budget using expected sales, the full start-up costs, working capital and recurring charges; do not assume directory figures or another franchisee’s sales will match your situation.
Example only: In one illustrative week, £500 sales minus £350 of example costs leaves £150 before tax and personal drawings. Separately, €600 sales minus €420 of example costs leaves €180 before tax and personal drawings; these sample figures are not typical earnings or a forecast.
The rules
A franchise is a business arrangement based on a contract and the use of the franchisor’s brand and system Xero. You can run one in the UK or Ireland if you follow the agreement and relevant tax and activity rules. Check sector-specific requirements with your local authority or regulator.
UK and Northern Ireland
- Tax and Self Assessment. If you’re a sole trader, the first £1,000 a year of trading income is covered by the trading allowance. If you earn more than that, tell HMRC. The £1,000 is your gross income before expenses. If you need to register for Self Assessment, the deadline is 5 October after the tax year ends GOV.UK Tax Help for Hustles GOV.UK.
- VAT. You must register for VAT if your taxable turnover is over £90,000. Check your position with HMRC or an accountant Business.gov.uk.
- Data protection. Use the ICO self-assessment tool to check whether your business needs to pay a data protection fee. The ICO says you need to pay a fee in some cases, including when you advertise or market another person’s business, goods or services. If your franchise involves promoting the franchisor’s business or services, check whether this applies to your activities. If you hold customer details only for your own accounts and transaction records, you’re likely to be exempt. This does not include information processed by or obtained from credit reference agencies ICO.
- Advertising and customer rights. Clearly label advertising and affiliate posts, for example with “Ad” ASA. Ask Trading Standards about consumer-rights requirements for your products or services.
- Insurance and eligibility. Consider suitable insurance and check the agreement for any insurance terms. Ask the franchisor about applicant age and eligibility, and about any activity-specific licences or permissions. Don’t assume the rules for one franchise apply to another.
Ireland
- Income tax. If you’re a PAYE worker, register for self-assessment using Form 11 if your taxable non-PAYE income is over €5,000 or your gross non-PAYE income is over €30,000. Below those amounts, declare it on Form 12 through myAccount. Check your position with Revenue or an accountant OpenAccountants.
- VAT. The VAT thresholds are €42,500 for services and €85,000 for goods. Check your business’s position with Revenue Revenue.
- Business name. If you trade under a name other than your own, register the business name with the CRO. Online registration costs €20 CRO.
- Advertising and customer rights. Clearly label commercial or influencer content with “Ad” where relevant CCPC. Ask the CCPC about consumer-rights requirements for your products or services.
- Data, insurance and eligibility. Check with the Data Protection Commission whether your customer records and systems create data-protection duties. Consider suitable insurance. Ask the franchisor about applicant age, eligibility and any activity-specific permissions.
Checked against official sources: 22 October 2026. Not yet reviewed by a qualified tax or legal adviser. General guidance, not legal advice. Check the official link beside each point before you start.
Common mistakes
- Treating a listed investment or franchise fee as the full cost.
- Forgetting working capital, recurring charges or money for living costs.
- Assuming a brand name guarantees customers, profits or quick payback.
- Signing before an independent adviser has checked the agreement and figures.
- Choosing a franchise without checking its daily tasks, workload and accessibility.
AI-made demonstration: this module has a 20-second street-chat video in the interactive guide. The presenter and the people in it are computer-generated, not real people.