What is franchising? Simply put,
franchising is a license granted by one person or organisation (the franchisor) which allows another person (the franchisee) to run a business under the name, brand and business model of the franchisor.
In essence, you gain a licence to operate somebody else’s proven business model.
Popular examples of businesses who choose to use the franchise model include MacDonald’s restaurants, Domino’s Pizza and Costa Coffee.
The franchisee will receive initial training and support in setting up the business – this could include elements such as sales and marketing and the systems necessary for that business to run successfully – in addition to any specific training and knowledge that business requires. This allows people who may have limited experience in a specific business or trade to be brought up to speed and ready to go.
Both parties, the franchisee and franchisor, will sign a legal contract setting out the rights and obligations of both parties. This document will also show how long the initial franchise period will run for, and what the options are in terms of renewal.
Franchising vs setting up a new business from scratch.
Franchising can combine the best elements from both large and small businesses – blending the conformity and support that big businesses provide, with the agility and the chance for franchisees to stamp their own mark on the business that smaller businesses traditionally provide.
At Franchise Talent, we think some of the main advantages of the franchise model are:
One of the big ones – limiting your risk. We all hear about the risk involved with launching your own business from scratch. A franchise allows you to hugely minimise that risk, and at the same time aim for the moon in terms of what you can earn. Let’s put that into numbers, according to a survey from the British Franchise Association, in association with NatWest, over 90% of franchises are still in business after 2 years, whilst in the same period only 20% of start-ups are still going.
Someone else is providing you with a market-proven business model – you’re not required to come up with a successful business idea yourself.
A recognisable brand name can be an enormous help in getting your own business up and running.Larger franchised businesses often embark on large sales and marketing campaigns from which you can benefit.
If you need a loan or other form of finance to help you invest in a franchise, you’ll often find the the franchise business itself will be able to help you secure funding.
You can hit the ground running in your new business as the tailored training is designed to get you running your business effectively, and making money as quickly as possible.
You are responsible for the growth of the business, and when you are ready for a fresh challenge, you can sell the business on at a profit.
Controlling the business
In terms of business control, each franchise business outlet or unit is owned and operated by the franchisee, whilst the franchisor keeps control over the way in which products and services are sold and marketed, and maintains a control on the quality and standards of the business. The exact nature of the franchisee/franchisor relationship will all be documented in the contract signed.
You will normally pay an initial fee at the outset to set the business up, receive training in the business and to allow you to use the brand. You will usually pay continuing fees to provide ongoing support. These fees many be based on a percentage of annual turnover or a mark-up on supplies. In return, the franchisor is obligated to continue to support their franchise network with training, product development, advertising and marketing support and management services.
At Franchise Talent, we’re committed to the world of franchising because we believe it allows you to combine your skill set, local knowledge and ambition with the business systems, intellect, head office resources and business acumen of a national or international organisation. The perfect combination for business, and personal, success.
We’re here to help. As we say time and time again, getting in touch with us puts you under no obligation. If you think franchising could be the right route for you to develop your own business, and the opportunities that can bring, then speak to us.