If you are looking to expand and take advantage of the success of your business, no business owner can rule out franchising. Many successful brands such as Starbucks, Costa Coffee, McDonalds and Subway have taken advantage of their brand and business to successfully move into new markets and expand their retail outlets by franchising its business.
The franchise format works with the business owner (i.e. the franchisor) licensing the brand, products and process by which the products are made to a franchisee. The franchisor provides a full breakdown for the franchisee on how to run the outlet. The franchisor will prepare the following:
- Operations Manual.
- Contract setting out the partiesÂ obligations – The Franchise Agreement.
- Any additional documents you require to promote, market and run the business.
It is intended that the business package will give the franchisee all it requires to hit the ground running. The franchisor will continue to support and promote the business in return for a licence fee and royalty. The advantage of a business choosing the franchise route includes:
- The cost of setting up and running the new outlet is borne by the franchisee.
- The franchisor is able to grow its business and brand by using the franchisees capital.
- The franchisor is no longer managing each outlet but is providing support, training, marketing materials and resources.
- The franchisor receives licence and royalty fees.
- The franchisor is able to continue to develop its brand and protect its intellectual property rights.
- The franchisor can decide who to issue a franchise to.
The key to any franchise is to ensure the brand remains protected and the reputation does not become tarnished. The actions of each outlet therefore have to be monitored to ensure a franchisee complies with the franchise agreement and the operations manual.
The franchisor will also need to ensure adequate support structures are put into place for the franchisee and the franchisor has adequate resources available to monitor the activities of the franchisees. The franchisee will need to be guided through the initial setup process and continually motivated throughout the term of the franchise.
If you are considering franchising your business you will need to ensure:
- Your business is successful and profitable. No potential franchisee will want to invest a loss making business.
- Your brand and intellectual property is protected. Prior to expanding your business into a new market or new territory you should carry out an audit and take all necessary steps to ensure the brand and intellectual property is protected.
Here at Lawdit we specialise in franchising matters and have advised both the franchisor and franchisee on many occasions relating to franchises from Dominos Pizza, Metro Rod, O’Briens Sandwich Shops, Subway etc.
If you require any further information on franchising your business please do not hesitate to contact Izaz Ali on firstname.lastname@example.org.