Travel Franchise: Is It Worth The Investment?

The travel industry is a lucrative business, worth over $5 trillion globally. With the world opening up again post-pandemic, now is a great time to invest in a travel franchise. Travel franchises offer a range of benefits, including the ability to work remotely and set your own hours, as well as the opportunity to turn your passion for travel into a profitable income.

There are different types of travel franchises to choose from, including offline and online travel agencies, wholesale travel agencies, and business travel agencies. The most common type is the travel agency franchise, with companies like Cruise Planners, Dream Vacations, and Expedia Cruises offering cruise, air, land, and sea vacations.

Investing in a franchise can be a great way to start your own business with the support and backing of an established brand. You'll have access to their business model, marketing strategies, and trusted suppliers, and you'll be able to leverage their brand equity. However, it's important to remember that you'll also need to pay monthly fees and commission shares, and the success of your franchise will depend on your passion and dedication.

Pros and cons of being a travel agent franchise owner

Pros

• Work remotely and set your own hours: As a travel agent franchise owner, you can work from anywhere in the world with an internet connection and set your own schedule. This flexibility allows you to work around your other commitments and take time off when needed.
• Travel the world: You'll have access to familiarization trips and discounted travel deals, allowing you to experience destinations firsthand and share your knowledge with clients.
• No college degree required: You can learn and grow your business at your own pace with the support of the travel community.
• High earning potential: With no ongoing fees or commissions, you can keep all your earnings and offer various services and vacation packages to your clients.
• You're your own boss: You have complete control over your business and can choose your niche, such as destination weddings, skiing, or adventure holidays.
• Instant brand recognition: Partnering with a well-known brand provides instant credibility and trust with customers, making it easier to attract new clients.
• Support and training: Franchise companies often provide ongoing training and support to help you succeed, including access to industry experts, marketing resources, and business development managers.
• Lower startup costs: Compared to starting an independent travel business, franchising typically has lower startup costs since you don't need to invest in a physical location or office equipment.
• Increased earnings potential: As your own boss, you can work harder and smarter to increase your earnings, with no caps on your income.

Cons

• You're in control: While being your own boss can be empowering, it also means that your success depends on your initiative and hard work. You must stay organized, hold yourself accountable, and manage your time effectively.
• Calls at all hours: As a travel agent, you may receive calls from clients at any time, especially during emergencies. It's important to set aside time for yourself to avoid burnout.
• Potential for rigid schedule: While a flexible schedule is a pro, it can also be a con if you let your schedule become too rigid or too flexible. Finding the right balance and sticking to a daily routine can help ensure you don't miss out on working with dream clients.

The different types of travel franchise models

There are several types of franchise models available, each catering to different business needs and preferences. Here are some of the most common types of travel franchise models:

Offline Travel Agencies

The most traditional form of a travel franchise is an offline travel agency, where you open a physical location and have customers visit you in person. This model typically involves higher start-up costs due to the need for a suitable premises in a good location. Offline agencies benefit from face-to-face customer interactions and the ability to build personal relationships with clients.

Online Travel Agencies

Online travel agencies operate entirely online, with travel advisors working remotely from home or anywhere with an internet connection. This model offers flexibility for franchise owners and employees, keeping start-up and recurring costs low. Online agencies communicate with customers via phone, video chat, and email to book vacations, utilizing modern technology alongside personalized service.

Wholesale Travel Agencies

Wholesale travel agencies are less common but still exist within the travel franchise space. They buy in bulk from hotels and airlines and then sell these packages to offline travel agencies. This model focuses on supplier-dealer relationships and bulk purchasing power.

Business Travel Agencies

Business travel agencies are another less common type of travel franchise, catering exclusively to corporate customers. They typically handle business travel arrangements, including flights, accommodations, and other travel-related services for corporate clients.

Luxury Travel Franchises

Luxury travel franchises specialize in providing exclusive and high-end travel experiences. This can include stays in luxury hotels, remote encampments in unique locations, or other sought-after destinations and accommodations. Luxury travel is a highly profitable sector within the travel industry.

Adventure Travel Franchises

Adventure travel franchises offer unique and exciting experiences such as climbing Mount Everest, walking the Great Wall of China, or scuba diving in the Red Sea. These franchises require more lengthy planning and organization but can provide once-in-a-lifetime experiences for their customers.

Cruise Travel Franchises

Cruise holidays are a huge growth area within the travel industry, with cruises to the Caribbean, Arctic Circle, and other destinations gaining popularity. Cruise franchises offer a range of vacation options and can provide significant commissions for franchise owners.

These are just a few examples of the different types of travel franchise models available. Each model has its own unique characteristics, benefits, and considerations, catering to different business needs and goals.

Advantages of a travel franchise over an independent business

Proven business model

A travel franchise provides a proven business model with a solid backing of support and mentorship. Over half of independent travel agencies fail within the first two years, whereas around 90% of franchise holiday businesses turn a profit in the same time frame.

Well-respected brand name

You get to skip the time-consuming and expensive introductory steps of building a company from scratch. You can trade under an established brand name, with access to trusted travel suppliers, customer service teams, and marketing strategies. This means you can focus on expressing yourself and delivering quality without sacrificing quality.

Training and support

Franchises offer training and support to help you build a business, including access to industry experts and courses to develop IT and marketing skills. Many also offer training in business admin, customer support, and building a network of trustworthy holiday providers.

Increased earnings potential

As your own boss, you have no cap on your earnings. The harder you work, the more money you will make. Travel franchises generally take a commission from the products you sell, passing a percentage back to yourself.

Regulatory compliance

A franchise will ensure all the regulations and licences for your business are in place, helping you avoid costly mistakes.

Funding

Banks and moneylenders are keener to invest in franchises because they represent a minimal risk compared to small independent companies. Travel franchises can demonstrate a history of profit and sustainability, and the support of an experienced partner who knows the marketplace.

The earning potential of a travel franchise

Commission-based pay

Travel agents typically earn a commission on any travel product they sell, such as hotel rooms, airline tickets, and tour packages. This commission is usually a percentage of the total cost of the trip and can vary depending on the supplier and the product. For example, the commission on a flight might be very different from that of a boutique hotel. Generally, more expensive trips, such as weddings, cruises, and safaris, tend to be more profitable.

Service fees

In addition to commissions, travel agents can also charge their clients a booking fee or service charge. This is to cover the extra support provided, such as researching trips and dealing with issues. Many clients are happy to pay this fee if they feel they are getting excellent service.

Niche markets

Focusing on a travel niche can help your business stand out. For example, you might specialise in adventure travel, cruising, or luxury getaways. Alternatively, you could focus on corporate travel, which tends to be more expensive and therefore can earn a higher commission.

Franchise models

If you buy into a franchise, you will have the support of an established brand and access to their marketing strategies, training, and industry expertise. You will also benefit from their brand recognition, making it easier to gain new clients. However, you will have to pay a start-up fee, monthly fees, and a percentage of your revenue to the franchise. Despite these costs, a franchise can still be a lucrative option as you will have the freedom to work whenever and wherever you want, and there is no cap on your earnings.

Online vs offline

Online travel agencies have lower start-up and recurring costs as they don't require physical premises. They also offer more flexibility, as you can work from anywhere with an internet connection. Offline agencies, on the other hand, require suitable premises in a good location, which can be costly.

Work-life balance

Owning a travel franchise allows you to be your own boss and set your own schedule, which can be a great advantage. However, it's important to stay organised and hold yourself accountable to ensure you're getting the work done.

Other benefits

As a travel franchise owner, you will have the opportunity to travel the world and experience the holidays you're selling firsthand. This can be a great way to build your knowledge and provide personalised recommendations to your clients. You will also have access to exclusive travel deals, which you can pass on to your clients.

The costs of starting a travel franchise

Starting a travel franchise can be a significant investment, and the costs can vary depending on the specific franchise and package chosen. Here are some key points to consider when thinking about the costs of starting a travel franchise:

Initial Franchise Fee

The first cost to consider is the initial franchise fee, which can range from several hundred to several thousand pounds or dollars. This fee is typically a one-time payment made when you first purchase the franchise. For example, The Travel Franchise offers a Lite package starting at £2,995, while Dream Vacations has a low initial investment fee of $3,500, with discounts available for certain groups.

Ongoing Membership Fees

In addition to the initial fee, most franchises will also charge ongoing membership fees, which can be a flat rate or a percentage of your sales. For instance, The Travel Franchise's Lite package has monthly fees of £299, while their more expensive Elite package has lower monthly fees of £99. These fees typically cover the ongoing support, training, and resources provided by the franchisor.

Location and Overhead Costs

If you plan to open a physical location for your travel agency, the cost of rent and overhead expenses will be a significant factor. Franchises in desirable, high-foot-traffic areas may be more successful but also come with higher rental costs. However, with the increasing popularity of online travel booking, you may consider an online-only presence to reduce these overhead costs.

Marketing and Advertising Costs

Effective marketing and advertising campaigns are essential for attracting customers and increasing revenue. Some franchises include marketing and advertising support as part of their packages, while others may require you to invest in these efforts separately. Consider the importance of brand recognition and the potential need for additional marketing costs to establish your presence in the market.

Training and Support Costs

As a franchisee, you will likely have access to training and support from the franchisor. However, the extent and cost of this support can vary. Some franchises include comprehensive training and ongoing support as part of their packages, while others may offer additional training and mentorship for an extra fee. Consider the value of this support and factor it into your overall costs.

Commission and Revenue Share

Most travel franchises operate on a commission-based model, where you earn a percentage of the holidays or travel services you sell. However, it's important to note that the franchisor will also take a cut of the revenue. Understand the commission-sharing scheme offered by the franchise and factor this into your expected earnings and overall costs.

Payment Plans and Discounts

When considering the costs, look into payment plan options offered by the franchise. Payment plans can make the initial investment more manageable by spreading out the payments over time. Additionally, some franchises offer discounts to specific groups, such as veterans, active military personnel, or experienced travel professionals.

Research and Consultation

Before investing in any franchise, it is crucial to conduct thorough research and consult with professionals. This due diligence can help you understand the legal and financial aspects of the business and ensure you are making a well-informed decision. While this may incur additional costs, it can help you avoid costly mistakes and set yourself up for success.

In summary, starting a travel franchise requires a careful consideration of the initial and ongoing costs involved. By evaluating the different packages, fees, and support offered by the franchisor, you can make an informed decision that aligns with your budget and business goals. Remember that the success of your franchise will depend on a combination of factors, including your passion, dedication, and willingness to adapt to the dynamic travel industry.

Frequently asked questions