WHAT IS FRANCHISING

GROWING YOUR BUSINESS

Imagine you are running a successful business. A business you created. Customers love your brand, your product and service. They tell you that if you opened more outlets, their friends would go there too. You want to expand, but it’s risky, so here’s the solution: find a franchisee partner who wants to build your business with you.

In return for the know-how that you’ve developed in growing your business, the use of the brand and format, your franchisee partner pays you a fee to open more stores or operations that help you grow. You work with them to help them succeed where you did.

Or take it from the other point of view. As a franchisee you might want to run your own business but aren’t sure you’ve got the right plan. Well, what about that brand you love and are so enthusiastic about? You might want to partner with them, as a franchisee in your local area, and become part of their business and realise your entrepreneurial dreams.

It’s a true win-win solution.

HOW DOES IT WORK?

At its heart, franchising is a commercial relationship based on a contractual agreement between two independent business parties, the franchisor (the seller of the business proposition) and the franchisee (the buyer).

The franchisee is granted, for the term of the contract and for a fee, the right to buy and operate the franchisor’s branded and formatted business system according to the prescribed rules and procedures developed for the system by the franchisor.

Think of it as being allowed to duplicate someone else’s tried and tested business, with their permission and with their know-how and help along the way. That is what sets apart franchising from other business strategies.

HOW IT LOOKS

There are five essential elements of a franchise

  • A brand name
  • A licence to the use the brand
  • A business concept
  • A fee paid by the franchisee
  • The franchisee owns the assets of franchised operation

The cornerstone of any franchise is the know-how developed for that particular system.

The franchise’s know-how defines the value of the business proposition and makes a franchise business duplicable and transferable to independent entrepreneurs working at arm’s length from the franchisor.