6) What does the Franchise owner have to do in return for this business opportunity?

In return for the licences, initial training and launch support the Franchise owner pays a franchise fee, which is not negotiable. The amount varies considerably between one franchise and another, i.e. McDonald's 1250 outlets, initial Franchise fee £30000, minimum investment to cover the Franchise owner's start-up costs £100000, compared with Contours Express Ladies Fitness and Weight Loss Studios 50 outlets, initial Franchise fee £6000, minimum investment to cover the start-up costs £15000. The Franchise owner will also pay a continuing fee, a royalty, in return for the continuing support of the Franchisor. The amount is usually calculated on as a percentage of the Franchise owner's gross sales.

The Franchisor maintains an interest in your business through the collection of this management service fee, typically a small percentage of turnover. This provides an incentive and the funding for the Franchisor to maintain network support initiatives such as national marketing, on-going training and product development, freeing you to concentrate on building a successful business.

How does the Franchise owner benefit?
The Franchise owner benefits from the use of a proven system with established demand; he may well benefit from national brand recognition.

What previous experience do you need to be a successful franchise owner?
Because you are investing in a proven and developed business concept, there is rarely a requirement for relevant industry or specific trade training experience. Franchising will provide you with a route into business ownership, with a back-up of a larger organisation.

What are the Franchise owner's responsibilities?
Franchise owners are responsible for local brand building and front line service delivery; regular visits by the Franchisor's staff are designed to ensure that every member of the Franchise network works for the network's success. In response to the strength of the brand and influenced by a continuous advertising message, consumers form certain expectations; it is in the interest of everyone that these are met. This forces the Franchisor to exercise control over the product offering and service delivery in each store.

7) Different ways of operating within Franchising

Through manufacturing or product franchises, e.g. Coca-Cola, there is a difference in the way each distribution unit operates.

• Through a distribution franchise e.g. The Co-Operative Wholesale Society, where a central buying organisation provides the products for sale, this benefits all the stores. Their shops may appear different both in their outside appearance and inside layout.
• Business format or system franchise.

Where a business has been successful, the Franchisor takes that business to another location and allows someone else to replicate the same successful operation in an identical way. It is a 'partnership' but not in a legal sense. There are several definitions of business format franchising used around the World, very similar but with differing emphasis.

As you progress through the modules you will become aware of the key players, the Franchisor, the new Franchise owner and how they depend on each other and on the Agreement that binds them together.

Business format franchising starts with a promise by the original business owner, who needs to develop his business, his brand, by offering an opportunity to another person to take his product, his service system and become a unique business owner in his own right and then sell the products or the service to others. This person does not need to have any previous experience in the trade or even in the particular industry. The previously successful system can be taught. The original owner, the Franchisor, will provide the training and assistance, so that both can eventually be profitably.