Fair and Equitable Reward for the Franchisor
The Franchisor’s relationship with their Franchise Owners is one of mutual co-operation to achieve the end result of success and profitability for all concerned. There is much talk about a win – win situation in franchising, without a doubt successful Franchisors practice and embrace a true win – win scenario.
The Complete Business System
For the relationship to work the initial training provided and on-going support services need to encompass all aspects of the business to ensure that the Franchise Owners business remains successful and profitable. There are a number of ways income can be derived from a franchise network but this needs to be proportional with the initial training and the associated support services both in the short and long term.
What are the income sources for a Franchisor?
The Franchise Package – this relates to a number of core deliverables and licensing rights that are provided to the Franchise Owner by the Franchisor, to help them succeed within their specific business. It needs to be comprehensive enough to provide all the training, marketing, operational, sales or, indeed, service activities of the business; it also needs to provide them with what is known as a “turnkey” operation or a complete “Business in a Box”.
The initial franchise fee needs to cover the cost of the core deliverables, associated licences, the related training and to provide the initial support and assistance for the development of the franchise network.
As with any business there can be commercial advantages when buying a relatively large quantity of a particular product or service. These so called commercial advantages can benefit both the Franchisor and Franchise Owner in developing each of their respective businesses, again a win – win approach is an essential part of this; I applaud a situation where a prospective Franchisor truly embraces this for the success of their network.
There are many ways that a Franchisor can assign commercial premises to the Franchise Owner if they so wish. Often landlords have the commercial experience in negotiating rents that a start-up Franchise Owner does not possess; also consideration with regards to the freehold of premises and how this works with them. Again, the commercial aspect of this needs to be fair and equitable to all concerned and should not be considered as a means of increasing the profitability for the Franchisor.
There are specific ways of presenting and collecting on-going fees from the Franchise Owner by the Franchisor and a number of key decisions will need to be made at the early stages of franchising a business, remembering that all chargeable items in relation to the franchise offering will have an impact upon the decision of the Franchise Owner to proceed or not with the franchise proposition. Again embracing a win – win situation with regards to these fees is vitally important both in the short and long term, at the end of a Franchise Agreement. The Franchise Owner should be happy to renew the agreement and continue with the successful relationship between Franchisor and Franchise Owner.
There are a number of franchise fees or levies which could be payable to a Franchisor and these include, without limitation, advertising, software support or indeed any specific related costs to that particular type of franchise opportunity.
Having gained know-how and expertise throughout my career, I often find that there is a solution from another business sector which may fit an unrelated business, again providing a commercial advantage for the Franchisor; of course, confidentiality is always paramount to our business. Gary offers a complimentary discussion, without fee or obligation to explore the possibilities of working together in developing a bespoke franchise opportunity.