Those in the high street and fast food retail sector incur some of the highest investment costs, and it is vital that anyone considering buying into this sector is absolutely clear about the costs and the commitment required.

Dan Archer, head of marketing at the bfa, said: “You need to understand right at the start of the research process exactly what you can afford to invest and the return that you require on that investment.

“You need to be sure that the total investment costs include the working capital needed to start the business, and through dialogue with the franchise units of the bfa-affiliated banks, how much you can borrow,” he said.

Generally the banks will lend up to 70 per cent of the set up costs, leaving the franchisee to find the remaining 30 per cent from their own resources.

Richard Holden, head of franchising at Lloyds TSB, said: “This might include using existing security, with a charge over your property. Another option is the Government's DTI Small Firms Loan Guarantee Scheme, which guarantee loans of up to £250,000.

“Beyond that, if you are looking at multi unit ownership, now a key feature of many of the high investment retail franchises, you may need to think about bringing in partners or other investors,” he added.

But not all high street retail franchises fall into the highest entry level investment bracket. New franchisees at leading fireplace and heating specialist Blazes, a full member of the bfa, require liquid funds of around £20,000 and an additional £40,000 of bank borrowing.

Seventy per cent of this investment goes into the setting up of the showroom including all fixtures and fittings, while the rest goes into things like franchise rights, training, and marketing support.

Managing director Michael Eyre said: “To the best of our knowledge this is the lowest entry level investment for any retail showroom franchise. The track record of our existing franchisees means that all the major high street banks are keen to support us, and we have formal loan schemes in place with most of them.”

Former surveyor Chris Knight bought his Bagshot, Surrey-based Blazes Fireplace and Heating Centre franchise, following a visit to the National Franchise Exhibition in 2005, and praised the company’s financial and operational support.

He said: “Blazes have put a lot of time and investment into the business model and the brand. I’ve had regular visits from directors and there’s always somebody to speak to when I need them.”

The key to understanding the nature of franchise fee structures and identifying opportunities that represent value for money is the ability to make a structured comparison between franchisors.

Dan Archer added: “bfa workshops are a good place to learn how to structure your research as they will explain all the jargon and include a presentation from an affiliated bank on how to go about accessing finance.”

For more information about franchising visit www.thebfa.org.uk