Module 1 - Introduction to franchising, is franchising for you? This is the first module of the certified course; 'Becoming a successful franchise owner'. This module will step you through the basic information you will need and questions you need to address on deciding if franchiseing is for you. The module is split into the following lessons: What is franchising? The Franchise relationship, some franchising myths Franchising how it started, the size of today's UK market What's needed to be a good franchise owner Key supporting players in the industry

Lesson 1: What is franchising?

Contents:

• Introduction
• Definitions
• What can a successful businessman or businesswomen do to expand his business?
• Considerations
• What is the special relationship between the Franchisor and the Franchise owner?
• What does the Franchise owner have to do in return for this business opportunity?
• Different ways of operating within Franchising
• Beware of systems on offer, which appear to be franchises but are not
• Conclusion, what we have discovered in this lesson
• Self assessment question

1) Introduction

As a potential new franchise owner we expect you have been looking up and down your High Street and across your out of town shopping developments to identify businesses that are part of franchise chains. Some you will recognise quickly, their businesses are large and very popular, Subway, Cash Generator Ltd. etc, some will surprise you, Bairstow Eves Franchising, Clarks Shoes for example. You identify them through articles in business journals, regular topics in the more serious daily and weekend papers and through your researches on the web. The franchising concept has seen rapid growth over the last 50 years; it is expected that 50% of all U.S.A. sales will be provided through a franchised outlet in the next few years.

2) Definitions

A franchisor.
A person or company who decides to expand the business by giving to selected franchise owners the right to do business under his trade name or service marks in accordance with the Franchise Agreement.

A franchise owner.
This is a person or company accepting the right, granted by the Franchisor to retail or provide services, using the Franchisor's trade name or service marks, within the terms set in the Franchise Agreement.

A franchise.
Is a licence covering three key elements:-

• The ability of the Franchise owner to use the Franchisor's name and marks.
• The control and assistance given by the Franchisor to the Franchise owner as he runs his own business.
• A payment by the Franchise owner to the Franchisor of a franchise fee for the licence.

3) What can a successful businessman or businesswomen do to expand his business?

• Option 1 He can open new independent outlets.
• Option 2 He can franchise his product or service, a very attractive proposition; he will then become a franchisor and offer franchises to suitable people he thinks will be successful, they are called franchise owners.

From the Franchise owner's viewpoint, is there a better chance of being profitable by buying a franchise or by running your own business as an independent operator?

There is a greater chance of being successful as a franchise owner, because in a successful network, the Franchisor supports the Franchise owner. A good Franchisor will exercise sufficient control to make sure that the Franchise owner operates the outlet in the best possible way to promote and sell his brand; a brand that has proved successful and profitable in the past.

The business owner decides to take the option 2 and franchise. He is then the Franchisor who licenses his trade name, the brand, and system, to another businessperson who becomes the Franchise owner. As a new franchise owner that person agrees to operate strictly to the conditions laid down in the agreement between the parties as evidenced in the Franchise Agreement. A franchise is now in place.

How does the Franchise owner benefit?
The Franchise owner benefits from the use of a proven business system with established demand. With more established franchises the Franchise owner may also benefit from national brand recognition.

What does the Franchisor receive for creating this opportunity?
By setting up a franchise network, the Franchisor raises capital from the initial fee to cover recruitment, franchise owner training and launch support and the use of his intellectual property rights and for the further development of his brand.

Next Page>>>