If you are thinking about taking the plunge into entrepreneurship, you are likely to stumble across the term franchise at some point.
Even though it may seem logical to make an assumption, judging by the name, that a franchise is some type of French cheese or fries, it has actually nothing to do with foods, except it is widely used in the food industry. So, what is a franchise and why is it believed to be something that can help you fulfil your boldest business aspirations? Take your time when getting clued up.
The definition of franchising comes down to the following: it is a business system in which an established company (known as a franchisor) licenses another party (known as a franchisee) to sell its products or services under its brand name. In return, the latter pays a one-time initial fee and ongoing fees – royalties. The amount of royalties to be paid to a franchisor on a monthly or yearly basis will, in most cases, depends on how much a franchisee makes in gross sales during a specified period.
In layman’s terms, it’s all about buying a ready-made business that comes with a tried-and-true range of processes, proprietary technologies, and so on.
Franchising offers plenty of opportunities to entrepreneurs, which are not available to those who take a start-from-scratch route. It saves you the trouble of carrying out market research, building brand awareness, and developing unique business methods because everything has already been done for you.
These days, franchising proves to be a phenomenally popular way of doing business in many industries, including:
- Building Maintenance
- Home Improvement
- Property & Estate Agency
- Legal and Finance
The other side of the franchise definition
From a legal perspective, franchising is a form of a relationship between you and the company you buy a license from. Like in any other type of business partnership, you are supposed to enter into a contract with a franchisor to become the holder of a franchise, meaning that you have a range of legal obligations to fulfil. Therefore, it’s important to realise that you probably won’t be in a position to have the upper hand when operating your new business.
As a franchisee, you are bound by a franchise agreement to meet all operational requirements set by your franchisor. These can involve everything from the general way of doing business to what markets you are allowed to cover and which ones you are not. On top of that, your success largely hinges on that of your licensor, so the parent company’s problems affect you, too.
How to find the perfect franchise opportunity?
If you are utterly determined to acquire a franchise, meaning that it’s not for you to launch a business from the very beginning, you may have a hard time finding the right company to partner with. However, this is never the case with Franchise Local, one of the largest directories of franchise opportunities available in the UK.
Be sure to create an account with us to avail yourself of the golden opportunities that you’ve been waiting for!