Made redundant? What a franchise actually costs — and whether it's right for you
Redundancy pushes a lot of people into looking at self-employment for the first time. This page is a straight answer to the two questions that matter: what you can realistically start with the money you've been given, and whether franchising suits the way you want to work. No hype, and no pretending it's for everyone.
The honest version first
A franchise is a licence to run someone else's proven business under their brand, using their systems, in an agreed territory. You pay an initial fee, then ongoing fees — usually a percentage of turnover — and in return you get training, a recognised name and a model that has already been tested. You are still self-employed, and you still carry the risk.
It suits you if
- You want a structure and a playbook rather than inventing everything yourself.
- You're comfortable following someone else's system closely.
- You can fund the investment and still keep a cash buffer for household bills.
- You're happy dealing with customers and staff face to face, and being the person accountable when something goes wrong.
- You want to build something you can eventually employ people in, or resell.
It doesn't if
- You need a guaranteed monthly income from day one.
- Your payout is the only money between you and the mortgage.
- You want full creative freedom over pricing, branding and suppliers.
- You dislike being audited or held to brand standards.
- You're looking for something passive — very few franchises are, early on.
If that second list sounds more like you, that's a useful answer too. Employment, contracting or an independent start-up may fit better, and it costs nothing to conclude that now rather than after you've signed a five-year agreement.
Find out what fits your payout
Rather than scrolling a directory, tell us the money you have available and how you want to work. We'll show you the live opportunities that genuinely fit and email you our redundancy guide at the same time. It's free, and nothing is passed to a franchisor unless you choose to request information.
Get your shortlist and the redundancy guide
Tell us your budget and how you want to work. We'll show you the live opportunities that actually fit, and email you our 9-page redundancy guide — the tax position on your payment, how much to hold back, funding routes and the red flags to walk away from.
- Matched from live UK opportunities
- No cost, no pressure, no sales calls
- Nothing shared until you request info
Funding
Can you use your redundancy payout?
The tax position. The first £30,000 of a genuine redundancy payment is normally free of income tax and National Insurance. Notice pay, holiday pay and bonuses are taxed as earnings, so the amount landing in your account is often lower than the headline figure. Work from the net number, not the gross one.
What lenders expect. High-street banks with franchise departments will often lend against a recognised franchise brand, typically expecting you to fund 30–50% yourself. Your payout works well as that deposit. The government-backed Start Up Loans scheme is a separate route for smaller amounts, with a fixed rate and free mentoring.
Keep a buffer. The mistake we see most often is putting the entire payout into the business and leaving nothing to live on. Most franchises take months, not weeks, to cover a full household income. Ring-fence at least six months of essential outgoings before you commit anything.
Budget past the franchise fee. The initial fee is rarely the whole cost. Add a vehicle or premises, stock or equipment, insurance, launch marketing, and working capital for the first few months. Ask each franchisor for a full breakdown in writing, and treat any reluctance to give one as a warning sign.
This is general information, not financial or legal advice. Speak to an accountant and a solicitor experienced in franchising before you commit.
Using redundancy money to start a business
There are broadly three routes open to you once the payout lands. Starting something from scratch gives you total control and the lowest entry cost, but you build the brand, the pricing, the systems and the customer base yourself, and most of the risk sits with you. Buying an existing independent business gives you immediate turnover, though you are paying for goodwill and inheriting whatever the previous owner left behind. Taking a franchise sits between the two: you pay for a tested model, training and a recognised name, and you accept that you run it their way.
A redundancy payout suits the second and third routes better than most people expect, because it usually arrives as a lump sum at the exact moment lenders want to see a deposit. Used as 30–50% of the total investment rather than the whole of it, it stretches considerably further and leaves you money to live on while the business finds its feet.
The order that works is boring but it protects you: work out your net payout, ring-fence six months of household bills, decide what is genuinely investable, then look at what that figure can buy. Deciding it the other way round — finding a business you like and working backwards — is how people end up over-committed in month four.
Business ideas after redundancy
The sectors below come up most often with people who have just been made redundant, because they start at sensible money, train you from scratch and generate cash reasonably early. None of them are passive, and none of them suit everybody.
Cleaning
Usually the lowest entry cost, with recurring commercial or domestic contracts and quick cash flow. Unglamorous, and it lives on reliability rather than clever marketing.
Van-based & mobile
No premises, no lease and no business rates. You take the service to the customer, which keeps overheads low but ties income to the hours you can physically work until you add a second van.
Care & senior care
Long-term demand and genuinely meaningful work, but heavily regulated, staff-dependent and slower to break even. Best suited to people comfortable with compliance and recruitment.
Children's activities & tutoring
Often part-time and term-time, which works well alongside other commitments. Income is seasonal and rises with the number of classes or sessions you can run.
Business services
Home-based, low fixed costs and higher margins, typically selling to other businesses. It rewards people who are comfortable networking and building relationships.
Food & coffee
The highest recognition and the highest fit-out cost. Premises, equipment and staffing mean a bigger investment and longer hours, but strong brands bring their own footfall.
If none of those appeal, that is worth knowing early. Interest in the actual day-to-day work matters more than the numbers on the brochure — you will be doing it every day for at least five years.
Taking a franchise after redundancy: what actually changes
Your income moves from monthly to lumpy. Employment pays you the same amount on the same date. A business pays you what is left after everything else is covered, and in the early months that can be very little. Budget on that basis from the start rather than hoping otherwise.
Nobody manages your week. The franchisor supplies the model, the training and the support, but the discipline is yours. People who do well after redundancy tend to be the ones who kept a working routine from day one.
Your experience is worth more than you think. Managing budgets, running teams, dealing with difficult customers, hitting deadlines — franchisors value all of it, and most would rather train someone sensible than recruit someone who already knows the trade.
Your timing needs to be honest. Six to twelve weeks from first enquiry to trading is realistic once you allow for discovery calls, the franchise prospectus, independent legal advice, funding and initial training. If you need income inside a month, look at contract or interim work first and revisit this properly.
It is also worth checking whether a franchisor is accredited by the Quality Franchise Association, and speaking to two or three existing franchisees before you sign anything.
Ask the franchise assistant
Tell it your budget and it'll tell you what's realistic
Ask anything — "I've got £20,000 and no industry experience, what could I realistically do?", "what can I run alongside contract work?", "how much do cleaning franchises really cost?". Answers are drawn from our own independent guides, with the sources listed and matching opportunities you can request information from.
Franchise Advice Assistant
Answers grounded in our own guides, with sources and matching franchises
Redundancy and franchising: common questions
Can I use my redundancy payout to buy a franchise?
Yes. Redundancy pay is yours to use as you choose, and the first £30,000 of a genuine redundancy payment is normally free of income tax and National Insurance. Many people use part of it as the deposit on a franchise and borrow the rest, rather than spending the whole payout up front.
How much of my payout should I actually put in?
A common approach is to invest part of the payout and keep a separate cash buffer covering at least six months of household bills. Lenders typically expect you to fund 30–50% of the total investment yourself, with the balance available through a franchise loan or the government-backed Start Up Loans scheme.
Do I need industry experience to buy a franchise?
For most franchises, no. Franchisors train you in their system and many prefer people from outside the sector, because there are no bad habits to unlearn. Discipline, people skills and a willingness to follow a proven process matter far more than a matching CV.
How quickly can I be trading?
Typically six to twelve weeks from first enquiry, allowing for discovery calls, reviewing the franchise prospectus, taking independent legal advice, arranging funding and completing initial training. Territory availability is usually the limiting factor.
What if it doesn't work out?
Franchise agreements run for a fixed term, commonly five years, and you are responsible for the ongoing fees during it. Before signing, ask the franchisor how many franchisees have left in the last three years and why, and speak to existing franchisees directly. Always take advice from a solicitor experienced in franchising.
What are the best business ideas after redundancy?
The ones that start at money you can afford to lose, train you from scratch and generate cash early. In practice that means cleaning, van-based and mobile services, care, children's activities and business services. Food and coffee brands have the strongest recognition but need a much larger investment because of premises and fit-out.
Is a franchise better than starting my own business after redundancy?
It depends on how much structure you want. A start-up is cheaper and entirely yours, but you build the brand, pricing and customer base from nothing. A franchise costs more and restricts how you operate, in exchange for a tested model, training and a name people already know. Neither removes the risk.
Should I use all my redundancy money to start a business?
No. Use part of it as the deposit and keep a separate buffer covering at least six months of household bills. Lenders typically expect you to fund 30–50% of the total investment yourself, so a payout used as a deposit stretches much further than one spent in full.