What is franchising?
Here’s all you need to know to get you started
What is franchising? successful business. In return, underestimated. The franchisor
Business format franchising the franchisee usually pays an should also be selective
– the most common type of initial fee to the franchisor and about their franchisees, so
franchising – refers to the then a percentage of the sales if they are asking you lots of
granting of a licence by one revenue. questions, it’s a good thing!
person (the franchisor) to The partnership needs to work
another (the franchisee). This Why choose franchising? both ways and you have to
means the franchisor – the With franchising, your chances be just as certain about the
brainchild of the business of success are dramatically business and franchisor as
– offers you the opportunity higher than with a business they are of you.
to buy the business model, start-up. One of the many Also, don’t feel that you
brand, franchisor’s expertise reasons for this is you are cannot bring anything new or
and experience, training and buying into a business model entrepreneurial to a franchise
support, and run it as your own that has a proven track record – many franchises have annual
and you have the franchisor’s meetings, which encourage
support to help you get up and franchisees to discuss new
running. And with the 2009 ideas and bring new practices
NatWest/bfa Franchise Survey into the franchise.
revealing that 90 per cent
of franchises are reporting What key questions should
profi tability, franchising I ask?
continues to remain a solid Find out how long the business
What is franchising?
business method despite the has been running, ensure you
downturn. speak to other franchisees (the
franchisor should encourage
Are there any this – be wary of the ones who
disadvantages? don’t!), always ask about the
It is important to be level of support provided, as
confi dent in the choice this is crucial to getting your
you make. You must business off to a great start.
fully understand what Don’t forget you can check
you are getting into and to see if the sums add up
choose a franchise to suit by looking at the business
your ambitions. With any accounts. Ensure you ask
business decision that is about the product itself and
going to involve your hard- question whether there is a
earned cash, the importance demand (and not too much
of research must never be competition) in your area.
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