|
According to the text books, franchising is a form of business
organisation in which a company which already has a successful product
or service (the franchisor) enters into a continuing contractual
relationship with other businesses (franchisees) operating under the
franchisors trade name and with the franchisors advice and guidance,
in exchange for a fee.
So, five keys points to look out for when considering a franchise:
- The franchisor should already have a successful business and should be able to provide accounts and other information to demonstrate this.
- There should be a contractual relationship between
the franchisor and franchisee, a written legal agreement that outlines
the obligations of both franchor and franchisee and describes the
actions to be taken in certain situations.
- The franchisee should operate under the franchisors existing trade name and logo. Ideally, this will be a registered trademark.
- The franchisor should offer advice and guidance to
help the franchisee set up and run their business. This may be offered
through a written Franchise Operating Manual, formal initial training,
ongoing training programmes, regular review meetings and informal
get-togethers.
- The franchisee should pay a fee to the franchisor.
Typically, this consists of an Initial Fee, a Licence Fee and an
ongoing Management Fee. The Initial Fee covers initial costs such as
training and support. The Licence Fee covers the licence to operate
under the trade name and in accordance with the Franchise Operating
Manual for a defined period of time. The Management Fee covers the cost
of ongoing training and support. Some franchises also have an
Advertising Contribution (sometimes called a Marketing Levy), a
contribution that all franchisees make to a central marketing fund.
Other franchisees may involve additional fees, for example.
|
|
|
