Business Format Franchising

The franchisor licenses the franchisee a complete plan – a business format, operating system and trademark to his/her franchise, including step-by-step procedures for major aspects of the business, and anticipating most management problems, provides a complete matrix for management decisions confronted by the franchisees.

Conversion Franchisee

It is a franchise that permits existing businesses to join a national franchise system to use its recognised name, trademark and operating system.

Franchise

A franchise is a grant by the franchisor to the franchisee, entitling the latter to the use of a complete business package containing all the elements necessary to establish a previously untrained person in the franchised business, to enable him or her to run it on an ongoing basis, according to guidelines supplied, efficiently and profitably.

Franchisee Fee

It is a one-time fee paid by the franchisee to ‘buy into’ the franchise. Generally, the fee reimburses the franchisor for the costs of initial training and support for new franchisees.

Franchising

Neither an industry nor a business, rather franchising is a method of doing business within a given industry. At least two parties are involved in it: the franchisor and the franchisee. Technically, the contract binding the two parties is the franchise.

Franchisor

The franchisor owns the business system and associated trademarks or trade names. Franchisors allow franchisees to use these under license in a designated area and for a fee. They then support their franchisees, both in starting their business and in continuing to make it work.

Franchisee

The franchisee buys the right to run the business using the trademark and trading system. The business is run according to the procedures set out in the franchise operating manual and under the terms of the franchisee agreement.

Master Franchising

The franchisor grants the master franchisee the right to act as the franchisor in the target territory. The master franchisee may open his or her own outlets, sub-franchise or do both. The primary advantages to the franchisor of master licensing are limited capital investment; tapping into the master franchisee’s knowledge of the local market and only having to deal with one party.

The Phat Pasty franchising network will soon expand the business by adding another great concept just like the Phat Potato Company. The Phat van provides a range of great products, such as homemade sandwiches, salads, soups, baguettes and smoothies.

The Phat Pasty van also offers traditional handmade Cornish pasties. These Phat vans were exclusively developed for the use of Phat Pasty franchisees. They look like a funny camper van and have a patented oven system at the back of the van, which is very unique and will lead to success of the business.

The Phat potato van can be booked for weddings, private parties, local activities and football tournaments. This allows the Phat Potato Company to continue its versatile business and to maximise the sale and profits of this franchise.

The Phat potato van will operate alongside the Phat Pasty vans everyday serving over 500 customers. The originator of the Phat Pasty Company Laura Clark said after nine months of research and development, they are ready to offer their loyal customers something nutritious and filling each day for their lunch.

Established in 1986 Martin & Co has its offices across the country offering services like property lettings, management and homes for sale. Among its franchisees, the most noteworthy has been the Stockport office.

The Stockport staff had plenty to celebrate after they were declared winners of a top award at the firm’s AGM. Beating off intense competition from across the firm’s 130 plus nationwide network, the Stockport franchise, which just opened for business two years ago (in April 2006), won the much coveted Best Young Franchise title – in recognition of its remarkable success in achieving the highest average number of lets on a monthly basis during 2007.

This was owing to hard work and motivation from the management that inspired the Stockport staff to excel. It was with the help of Mrs Kate Hancock and Miss Dominika Chudyk that the Stockport office proved their worth. The award is surely a tribute to all the efforts that the whole Stockport team put in, and an achievement every team member can be proud of, indeed.

Darren Crofts, a support worker with a self-help community housing association, wanted to start up his own business. He recently joined the Safeclean network in the Bristol area.

He explains that he has been looking for a change for a number of years and it is an opportunity to get out of his comfort zone when someone is ‘there in the background to motivate you’.

Darren moved to Bristol to be with his partner. After looking at the set-up of the company, he believed it had the potential to make money. To elaborate, Safeclean uses organic products. All of them are environmentally friendly organic products. The Safeclean system is a unique cleaning programme. Safeclean does not use any harmful products and do not rely on pesticides to eliminate dust mites. It physically destroys the soiling, odours and other harmful bacteria and fungal spores giving a truly healthy clean atmosphere. The process is usually dry and it biodegrades leaving no dirt attracting residues.

Safeclean will provide an itemised non-obligation survey and quotation. They will redo the job in case the customers are not happy and if not satisfied with the cleaning they will refund your money back. Safeclean, a full and founder member of the British Franchise Association, is looking out for ambitious entrepreneurs like Darren to increase its reach.

Franchising involves a certain amount of documentation, especially in countries that have franchising laws, unlike in the UK, where you are free from any such obligations to starting up a franchise business. Countries requiring documentation to be in place for commencing a franchise business necessitates a sizable number of detailed plans, proposals and business operations system.

The Franchise Agreement

Nevertheless, in the UK, you need to enter into a written franchise agreement as franchisee with your franchisor, which details the mutual responsibilities of both the parties. It generally lasts a few years, and when the term is finished, the contract gets expired and must be renewed. The contract needs to be renewed at the franchisee’s option. Normally, a franchise agreement is not sold, transferred or assigned without the permission of the franchisor.

The Lease Agreement

A lease agreement is a document granting possession for a given period without conferring ownership. The Lease Agreement specifies the terms and conditions of a company by the tenant. A typical lease will generally include provisions such as:

• abandonment of premises
• lump sum rent
• alterations and improvements
• assignment and subletting
• attorney fees
•  broker
• commencement date
• condition of the premises
• contingencies, default by landlord or tenant
• exclusivity
• force majeure
• hours of operation
• indemnification
• ingress and egress
• landlord’s maintenance obligations
• landlord’s right to access
• leasehold improvements
• maintenance and repair
• option to purchase
• option to renew
• parking
• rules and regulations
• services and utilities
• signage and term

The 4 star Hilton London Metropole is among Europe’s largest hotels and conference centre chain. This proved to be a perfect location for franchisee’s Gary Mudge and Don Graham’s kiosk in order to start their new business. Their Ask AMI touch screen kiosk is easy to understand and is user friendly, which enables the guests to use it as per their requirements.

The Ask AMI Touch screen kiosk displays all the results on the screen showing directions and distances from the hotel, to tell you about the nearest restaurants, clubs, shops, bars, taxis, attraction, chemist shop, etc.

The idea was first conceived and put on paper almost a year ago. A successful implementation has led to the installation of their 25th touch screen kiosk. It is user friendly, simple to use and employs state of the art technology. The feedback has been great. Hilton already has an Ask AMI touch screen kiosk located in some of the most popular hotels in the country such as the Holiday Inn, Crowne Plaza, Swallow, Park Inn, etc.

Each franchisee is allocated a minimum of 3 kiosks that the company sources and installs on behalf of the franchisee.  This is a unique concept in the country, and they continue to look for enthusiastic franchisees with some level of sales coupled with management ability.

The consumption of wine has augmented in recent times due to robust demand fuelled by the active social lives of people in Britain. There has been a tremendous rise in leisure activities and people’s new perception about wine as a healthy alternative has driven wine’s popularity. The wine industry is experiencing such a massive growth that it makes the idea of investing into a wine making franchise business in the UK, all the more interesting.

Many franchise businesses that have opened up in the recent past in this industry are at their embryonic stages. More and more entrepreneurs are capitalising on the potential opportunities arising out of this business as it offers substantial profits if the product is marketed prudently.

At the same time however, a wine making franchise business also holds certain challenges to its running, in terms of adapting to new market trends, as not many people are completely aware of the knowledge or technical know-how in this sector. While the franchisor would be responsible for offering extensive training, marketing and advertising support to the franchisee, the latter is also required to possess the willingness to learn something which has been a not-so familiar business to him, as it is the understanding of ongoing trends and consumer tastes that are the trick. Secondly, adequate time should be devoted for the successful operation of a wine making franchise business.

When experienced franchisees open several locations there are a lot advantages and some allied risks also. But ultimately the multi unit franchising is the in thing in franchising for business which are vibrant and fast growing. Evaluate some of the pros and cons of multi unit franchising here.

Benefits of Multi-unit franchising:

1. 1. The business can rapidly expand and grow to different territories and geographical locations
   2. The experience in running one franchise can be duplicated in other units and locations
   3. It also helps in establishing a common policy and procedure that can be followed throughout the multiple units
   4. Since marketing and promotional activities can be done on a collective basis, the cost and effort involved is distributed among different locations
   5. Employees of different locations can be rotated and this will ensure uniformity in learning and management

Risks in multi unit franchising:

1. 1. Not all business can adopt multi-unit franchising
   2. It requires additional finance
   3. It will be a test of the leadership and management abilities of the franchisee as managing multiple units will not be easy, at least initially
   4. As the business grows you should be able to manage the multiple units effectively
   5. Thorough market research is required, because if one franchise unit fails it will affect the popularity of the whole business

Clearly analyse if multi unit franchising suits your business and strategise your future accordingly.

While franchising a business is a promising business prospect, before embarking on the franchising business there are some crucial factors you must consider and clarify:

• Is this franchising business the right one for me?
• Do I have a clear understanding of the business?
• How strong is the franchisor’s brand?
• What has been the track record of the franchisor’s business
• How has the company dealt with the franchisees and how good is the relationship?
• Has any franchise of the company failed and why have they failed?
• How promising is the future and the profitability of this business and what are the possible threats to the business?
• What are the costs that you would incur?
• How much training is required?
• What are the marketing and advertising strategies and plans for the future?
• Who are the other franchisees?

Apart from these general enquiries about the franchisor’s business, you must ask the franchisor in detail about the arrangement, agreement and the payments. There is absolute clarity required in a franchising business. This will not just help you in having a good relationship with the franchisor; it will also ensure the profitability and efficiency of the business. Territorial demarcations and knowledge about who the other franchisees are is crucial. Make sure that the franchisor has clear cut policies on handling the franchise network. Also do find out how the franchisor handles the grievances of its franchisees.

You will not disagree that promoting your business online will help in strengthening and expanding your prospects. Building a strong online brand for your company will not just bring you good business prospects but also help you in setting up a quality franchising network. Here are some effective web strategies that will help you in building your business online.

• Have a compelling website which is clear about its objectives
• Embark on a complete online brand building exercise
• Start newsletters addressing your franchisees, clients etc
• You can organise a virtual Discovery Day online
• Facilitate online applications from new franchisees
• Create an online platform for your franchisees to communicate and transact with you. This will help the franchisee to constantly keep in touch with the franchisor’s business and objectives
• Do email campaigns to promote franchising opportunities
• Efficiently carry out franchising campaigns on your website through advertising. This will broaden your choice on licensing to the right franchisees
• Promote your business on your franchisee’s website
• Market your website using advertising campaigns
• Inform the readers about your products and create an online information base
• Do online Public Relations activities

Your online marketing strategies can be merged with your offline promotions and together the publicity will be well taken care of. Your active presence in the online space will build your credibility on the web which is a worldwide platform.