ALL ABOUT FRANCHISING
What Is 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 British Franchise Association
So what does that actually mean for you as the business owner?
Franchising can be described as a “partnership model” between a “franchisor” (the business owner) and a “franchisee” (an individual who wants to have their own business with the support of a larger business with a proven and successful business model, systems and processes).
The Franchisee pays you an initial investment for the licensed rights to operate under your brand. They receive training and ongoing support from you to help them launch, develop and grow their business. They would also expect to pay you a management services fee/royalty payment which would normally be a percentage of their turnover but could also be a fixed payment. In addition to this you may receive a monthly marketing levy which you would use to market and develop your brand nationally. Their business will be a “mini- me” version of yours and will typically operate within a defined and usually exclusive territory. The partnership is governed by a Franchise Agreement which protects your brand and provides all parties with clarity as to what is expected of them along with the rules for operating and selling the business.