Creating jobs in disadvantaged areas through start-up finance for new businesses
When jobs are scarce, self-employment can seem an attractive but risky option. However, franchising is a form of supported self-employment and is very sustainable - 90% of franchise businesses are still operating after 5 years and many can be started with little experience, training and cost.
Taking on a franchise allows you to buy the license to use the operating systems and brand of an already proven business model, whilst benefitting from training and start-up support as well.
This means it is seen as a lower risk form of business start-up by banks, mainly due to the track record of the existing franchisor. However, even with some amount of bank loan, there is still often a finance ‘gap’ for the cost of the franchise licence itself. This is a particular problem for someone who is unemployed or without access to mainstream capital.
To overcome this barrier, the FranchisingWorks Licence Fund will help to finance the purchase of licences from reputable franchisors on behalf of the franchisees. This will enable those without financial resources of their own to start a new franchise business. In short, the Licence Fund will help to turn jobseekers into job creators!
BSC has agreed to invest £1m in the FranchisingWorks Licence Fund alongside other investors (target fund size is £2.5m at launch).
Franchising Works currently operates in Manchester with start-up funding support from RBS, the 10 Greater Manchester councils (AGMA), the National Endowment for Science, Technology and the Arts (NESTA) and New Economy. FranchisingWorks works closely with Jobcentre Plus, local self-employment service providers, high street banks, and the UK franchising community.
The License Fund is managed by The Shaftesbury Partnership, which was founded in 2006 to establish social ventures, and scale them up for lasting impact. Over five years, the fund will provide financial support to up to 200 unemployed and financially excluded people in Manchester to set up their own franchise businesses and could create a total of 800 jobs in disadvantaged communities.
Outcomes:
Employment and training
- Better occupation-specific skills and work experience
- Improved skills and attitudes (job readiness) for employment
- Increased number of people that enter work are satisfied with their employment
- Increased numbers of jobseekers enter and sustain (quality) employment
Beneficiaries:
- Individuals