You are here: Home > What is a Franchise > What is Franchising

What is Franchising

Franchising can be described as a 'business marriage' between a 'franchisee' and a 'franchisor'. As the franchisee - the purchaser of the franchise - you pay an initial investment for the licensed rights to operate under an established brand, and to be trained and supported by a central franchisor. The 'marriage' is protected by a Franchise Agreement which provides you with an exclusive territory for a set period of time on a renewable basis.

Because you are investing in a proven and developed business concept, there is rarely a requirement for relevant industry or business management experience. Rather franchising is providing you with a route into business ownership with the back-up of a larger organisation.

The Franchise Agreement provides for training in the operation of a business and the implementation of the franchise concept. This is followed by ongoing support in activities such as launching the business, sourcing stock, marketing campaigns and attaining sales contracts.

The franchisor maintains an interest in your business through the collection of a Management Service Fee - typically a small percentage of your turnover. This provides the incentive and the funding for the franchisor to maintain network support initiatives such as national marketing, ongoing training and product development, freeing you to concentrate on building a successful business.

Remember that not all franchise systems are necessarily well thought out or well tested. Membership of the British Franchise Association - requiring the signing of a charter for ethical franchising - is a good indicator of an opportunity worthy of consideration, but there is no substitute for properly checking out and researching a franchise. The first rule of investing in a franchise is 'check before cheque'.

As long as the business is soundly designed, has a genuine market, and all parties are committed and fair to each other, franchising provides a superb format for re-training people to change their life with their own business. If you're suffering insecurity in your employment or kicking your heels in redundancy, franchising could represent a route into securing a successful and profitable future business for yourself, but not by yourself.

McDonnell, McPhee & Associates  2008 - 2009

Back Email a Friend View Printable Version
Privacy Policy and Disclaimer