Businesses that are suitable for franchising should be able to answer “yes” to most of these questions:
No-one should enter into a franchise agreement thinking they can walk away from it. It is not as easy at that. You don’t have the right to quit when it suits you. A franchise agreement is a contract like any other. Before signing, both parties make a commitment to work together for an agreed term, usually five years. The Franchisor will have invested time and money into the recruitment process and also into the training of the Franchisee.
They want to see the franchisee put in whatever effort is necessary to make the franchise a success. And they will expect the Franchisee to honour his commitment to pay royalties or management fees due under the agreement during the term. Should you want to terminate the agreement before it expires you would be in breach of contract and the Franchisor could sue for the amount he would have earned had you continued to be a franchisee. This sum could be substantial. [Read the rest of this entry...]
By asking a lot of questions—of yourself, and of the Franchisor.
Franchising allows you to trade under the Franchisor’s name, trademark and system without you going to the expense of creating such a business from scratch. He’s spent the money, made the mistakes, and now he’s got the bugs out of the system. If it works for other franchisees in the network, it should work for you.
But will it? Have you ever run your own business before? Are you a good manager, well organised and able to multi-task? Are you a leader with strong team-building skills? Are you a good communicator? Can you sell? (Because every franchise involves sales and marketing.)
Above all, are you motivated, committed and driven by a desire for financial success?
You are? Then franchising could be for you. [Read the rest of this entry...]
The term ‘franchising’ has been used to describe many different forms of business relationships, including licensing, distributor and agency arrangements. The more popular use of the term has arisen from the development of what is called ‘business format franchising.’
Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.
The principle is simple - some companies choose to grow, not by developing in the conventional way, but by granting a license to others to sell their product or service. There are clear advantages to this: [Read the rest of this entry...]
