Often people consider taking on a franchise (the ‘franchisee’) so that they can benefit from the following key features of the brand that has already been established by the franchisor:
- The use of a powerful brand for a proven product/ service.
- The wealth of experience that the franchisor has in the product/service.
- The support that the franchisor can provide to the franchisee for the marketing of the product and any product/ service development etc.
Franchising is a very good method of growth for some businesses. Some of the key benefits for the franchisor will include:
- increased service and market penetration for the brand
- an identical business format following perfected practices/ procedures
- maximizing usage of existing networks
- a reduction in the risk of failure for the franchisor
- a level of control of the franchise business through a franchise agreement
- income: a royalty fee paid by the franchisee over a fixed term, including a fee based as a percentage of the franchisee’s turnover or margin on product/ service in addition to an initial franchisee fee (outlay fee) for the costs incurred in setting up the franchisee in business
- further income: the opportunity to make money from providing support and marketing services to franchisees.
To set up a franchise, the franchisor has to put in some hard work in documenting his practices/ procedures. First and foremost the franchisor must consider making the following preparations are in place:
- have a pilot operation up and running
- must have manuals, programs for marketing, training, monitoring, control procedures for the day to day running of the business
- all the above for the finances of the business
- an attractive package that appeals to others in order for it to be a successful franchise option.
If you are considering a franchise then get in touch with a member of Lawdit’s Commercial Team, who will be happy to help and advise.