WHAT IS FRANCHISING?
FRANCHISING BACKGROUND INFORMATION
The term 'franchising' has been used to describe many different forms of business relationships, including licensing, distributor and agency arrangements. The more popular use of the term has arisen from the development of what is called 'business format franchising.'
Business format franchising is the granting of permission by one person (the franchisor) to another (the franchisee), entitling the franchisee to trade under the trade mark/trade name of the franchisor.
In addition, the franchisee can and should make use of the entire package on offer, i.e. training in all the elements necessary to establish a previously untrained person in the business and to run it with continual support and assistance on a predetermined basis.
A franchise adds considerable value to a business opportunity i.e. - the franchisee invests in an asset, which he/she can grow through his or her hard work and diligence. It is saleable and transferable (within the terms of the franchise agreement) and, if you invest in a good franchise (e.g. a member of the bfa), it should increase in value)
WHO IS IN CONTROL?
Each business outlet is owned and operated by the franchisee. However, the franchisor retains control over the way in which products and services are marketed and sold, and controls the quality and standards of the business.
COST IMPLICATIONS?
The franchisor will receive an initial fee from the franchisee, payable at the outset, together with on-going management service fees - usually based on a percentage of annual turnover or mark-ups on supplies. In return, the franchisor has an obligation to support the franchise network, notably with training, product development, advertising, promotional activities and with a specialist range of management services.
-ENDS-
For further bfa information or a copy of the bfa Franchisor's Guide, contact the bfa on tel: 01235 820 470, email: Click here.
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