Franchising your business.[check] This checklist provides guidance to those who wish to expand their business through the sale of franchises. Franchising is a technique for business expansion, both for the small one-location company and the national multi-outlet organisation. It is often said to be one of the safest means of achieving growth, and although it does have many advantages, it still requires careful planning to be successful. Examples of large organisations that use franchising to expand include McDonalds, Tie Rack, and Swinton Swinton, town (1991 pop. 44,416), Salford metropolitan district, NW England, in the Greater Manchester metropolitan area. The town has cotton mills and factories for pottery, chemicals, and storage batteries. Insurance. A large number and variety of small businesses have used franchising, including Dial-A-Duster, Mobile Phone Centre, and Magic Windshields UK. Definition For the purposes of this checklist the term franchising refers to a 'Business Concept Franchise'. This involves: the franchisor, who lends his trademark or trade name and his business system to the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Advantages of franchising your business Franchising: provides an affordable means of accelerating expansion spreads the financial risk of expansion means that products or goods can be bought in bulk to cover the whole franchise network, thus increasing profit margins and competitiveness. Disadvantages of franchising your business Franchising does have some drawbacks, in that: some control and profit are lost by engaging a third party conflicts can arise between the franchisor and the franchisee returns are low until the franchise network has been built up. Action checklist 1. Take stock Define what has made your business a success so far and then ask yourself: * is it a unique or new concept that has the potential to expand locally, nationally or even internationally? * are the operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. of the concept polished, efficient and replicable? * would it be relatively easy to train others in the use of the systems and procedures? * are the profit margins built into the concept large enough to enable every franchisee to realise an attractive return on their investment? * is the franchise affordable enough to attract a number of franchisees? If you've you've Contraction of you have. you've you have you've have answered yes to the above questions then there is a good chance that you can franchise your business. 2. Obtain legal advice As what you are 'selling' is really your trademark (or trade name), make sure that it is legally yours and that any one found copying it can be prosecuted. Your name or trademark must be registered at the Trade Marks TRADE MARKS. Signs, writings or tickets put upon manufactured goods, to distinguish them from others. 2. It seems at one time to have been thought that no man acquired a right in a particular mark or stamp. 2 Atk. 484. Registry The configuration database in all 32-bit versions of Windows that contains settings for the hardware and software in the PC it is installed in. The Registry is made up of the SYSTEM.DAT and USER.DAT files. Many settings previously stored in the WIN.INI and SYSTEM. (see Useful addresses). 3. Draw up a business plan The business plan provides the means to: * appraise appraise v. to professionally evaluate the value of property including real estate, jewelry, antique furniture, securities, or in certain cases the loss of value (or cost of replacement) due to damage. the present and future of the business * work out short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. objectives * establish a framework for action to achieve those objectives. Your bank should be able to help you do this if you need assistance. Planning will help you to identify how quickly you can expand, who your competitors are, and whether or not your system will be able to compete with them. 4. Define the franchise package Work out exactly what you will be offering the franchisee, including: * the concept--trademark and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. trade name * initial assistance--finding premises for example * continuing training and advice * bulk purchasing Bulk Purchasing is when products are bought in large quantities. This often results in a lower price per item, or Unit price. Wholesale is selling or related to selling goods in large quantities for resale to the consumer. power * sharing the cost of national advertising. You can also include other areas, such as help with accounts and IT equipment. The package should also lay out what each franchisee will have to pay. You may choose a royalty only payment (leave plenty of room for the franchisee to make a profit). You may also wish to charge an initial and annual fee but if these are set too high it may discourage applicants. 5. Draw up a contract Take professional legal advice over the franchise contract to make it water-tight Wa´ter-tight` a. 1. So tight as to retain, or not to admit, water; not leaky. . If the selected franchisee does not perform to the required standard you should ensure that you can regain control of the franchise. 6. Prepare a pilot It is very important that you test out your franchise concept in one particular area. By doing this you will find out the best ways of recruiting and selecting franchisees, and the kind of support they need to start up. The lessons learned from the pilot will prove invaluable to the success of your franchising network. 7. Advertise the franchise Place adverts in the local newspapers of your pilot area, and in national franchise journals such as Franchise Magazine or Franchise World (see Useful addresses). Highlight the attractions of running a franchise of your concept, including your success so far and the market need. You will need a brochure to help 'sell' the franchise. Obtain outside help if you do not have the resources in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. to produce a professional-looking document. 8. Select a franchisee Selecting the right franchisee is vital, as no matter how sound your business concept and trade name, the franchisee will be the person responsible for 'sales' in their area. Increasing the number of franchises will be much easier if you can prove that the concept has been successful. Look into the backgrounds of the applicants carefully. Are they enthusiastic and hard-working hard-working adj → trabajador(a) hard-working hard adj → travailleur/euse, consciencieux/euse hard-working hard , or are they likely to give up at the first sign of difficulty? You will never be 100% certain that an applicant has got what it takes, but your business instinct instinct, term used generally to indicate an innate tendency to action, or pattern of behavior, elicited by specific stimuli and fulfilling vital needs of an organism. will give you a good idea. 9. Start the pilot Provide as much support as possible to get this first franchise off the ground. Give advice when it is needed, but be prepared to let the franchisee use their own initiative and don't 'crowd' them. Remember that now you have sold the franchise it is as much the franchisee's business as it is yours. 10. Monitor the franchise Learn from the results of the franchise pilot. It may mean that you have to revise elements of the franchise package such as royalty paid or training given. Get the franchisee's opinion by asking if there were any problems with the franchise and what other help would have been useful. 11. Advertise again You may wish to run further pilots, or, if the initial one was a success, you may wish to expand as quickly as you can get franchisees. However, remember that you will need to provide help, advice and training as well as all the resourcing for your franchise network. 12. Review the franchise on a regular basis You should never allow your franchise to become static. Make changes to the concept and the package you offer as necessary. Review each franchisee annually and decide whether you will renew their contract, look for another franchisee, or regain control yourself. Dos and don'ts when franchising your business Do Get legal advice about securing your trade name or trademark and when drawing up a contract with the franchisee. Select regions for franchising and suitable franchisees with care. Remember how long it took for you to get a foothold foot·hold n. 1. A place providing support for the foot in climbing or standing. 2. A firm or secure position that provides a base for further advancement. foothold Noun 1. in the market--be patient with the franchisee. Make sure that you can regain control of the franchise if necessary at the end of the franchise agreement. Don't Forget to pilot the franchise first. Just leave the franchisee to it without providing advice and training. Be too restrictive in the franchise contract--allow for innovation by the franchisee. Useful reading Guide to franchising, 7th ed, Martin Mendelsohn London: Thomson, 2004 Franchising: pathway pathway /path·way/ (path´wa) 1. a course usually followed. 2. the nerve structures through which an impulse passes between groups of nerve cells or between the central nervous system and an organ or muscle. to wealth creation, Stephen Spinelli, Robert M Rosenberg and Sue Birley London: Financial Times Prentice Hall Prentice Hall is a leading educational publisher. It is an imprint of Pearson Education, Inc., based in Upper Saddle River, New Jersey, USA. Prentice Hall publishes print and digital content for the 6-12 and higher education market. History In 1913, law professor Dr. , 2004 Buying a franchise, Phil Stone Phil Stone was an Oxford, Mississippi attorney who was a mentor of the young William Faulkner. Educated at the University of Mississippi and Yale, Stone had a law office in Oxford, Mississippi and provided the services of his secretary to type and submit Faulkner's early literary works to Oxford: How to Books, 2001 The Daily Telegraph telegraph, term originally applied to any device or system for distant communication by means of visible or audible signals, now commonly restricted to electrically operated devices. Attempts at long-distance communication date back thousands of years (see signaling). guide to taking up a franchise, 13th ed Colin Barrow barrow, in archaeology barrow, in archaeology, a burial mound. Earth and stone or timber are the usual construction materials; in parts of SE Asia stone and brick have entirely replaced earth. A barrow built primarily of stone is often called a cairn. , Godfrey Golzen and Helen Kogan London: Kogan Page, 2000 Useful addresses British Franchise Association, Thames View, Newtown Road, Henley-on-Thames, Oxon, RG9 1HG Tel: 01491 578 049 www.british-franchise.org Franchise Development Services Ltd Franchise House, 56 Surrey Surrey, county (1991 pop. 997,000), 653 sq mi (1,691 sq km), SE England. The county seat is Guildford. The North Downs cross the county from east to west. To the north the land slopes gently downward to the Thames, into which flow the Wey and the Mole, Surrey's Street, Norwich, NR1 3FD Tel: 01603 620301 www.franchise-group.com Publishers of Franchise Magazine Franchise World Highlands House, 165 The Broadway, London Broadway (or sometimes The Broadway) is a street in the City of Westminster, in central London. It runs north from Victoria Street. Buildings include:
Tel: 020 8605 2555 www.franchiseworld.co.uk The Trade Marks Registry Patent Office, Cardiff Road, Newport, South Wales South Wales south n → sud m du Pays de Galles NP10, 8QQ Tel: 0845 9500 505 www.patent.gov.uk/tm Some major high street banks have franchising departments that can offer advice. Thought starters * What have been the secrets of your business success? * What advice would have helped you when you first started your business? * What were the most difficult periods when building up your business? |
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