{"id":9915,"date":"2021-06-24T15:55:49","date_gmt":"2021-06-24T14:55:49","guid":{"rendered":"https:\/\/www.franchiselocal.co.uk\/news\/?p=9915"},"modified":"2023-09-01T10:53:52","modified_gmt":"2023-09-01T09:53:52","slug":"how-does-franchising-work","status":"publish","type":"post","link":"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/","title":{"rendered":"How Does Franchising Work?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_88 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #101010;color:#101010\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #101010;color:#101010\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#buy-in-fee\" >Buy-in Fee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#start-up-fee\" >Start-up Fee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#royalty-fees\" >Royalty Fees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#add-on-fees\" >Add on Fees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#making-sales\" >Making Sales<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"#\" data-href=\"https:\/\/www.franchiselocal.co.uk\/news\/how-does-franchising-work\/#adding-franchises\" >Adding Franchises<\/a><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Reading Time: <\/span> <span class=\"rt-time\"> 5<\/span> <span class=\"rt-label rt-postfix\">minutes<\/span><\/span><p class=\"c4\"><span class=\"c0\">There\u2019s a lot of pressure on businesses to show evidence of a commitment to their communities and the environment. Companies worldwide work hard to meet these growing demands.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">For those looking to start up their own business, it can take time to tick these boxes while simultaneously making money.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">Starting a business can be one of the most complex and financially challenging decisions, but the rewards can be phenomenal. Entrepreneurs should consider all the opportunities available before starting a new business.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">Because of this, franchising is an increasingly popular solution: an \u2018out of the box\u2019 business with community and environmental measures in place.<\/span><\/p>\n<p class=\"c4\">A franchise is when a company (the franchisor) has given someone else (the franchisee) the right or licence to market their products and services in a specific location. Find out more about<span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchise-meaning-in-business\/&amp;sa=D&amp;source=editors&amp;ust=1671665046060884&amp;usg=AOvVaw1I7qWdtkuv4VOEZXF0UV8X\" target=\"_blank\" rel=\"noopener\">\u00a0what a franchise is<\/a><\/span><span class=\"c0\">.<\/span><\/p>\n<p class=\"c4\">In this article, we\u2019re going to look at\u00a0<span class=\"c9\">how a franchise makes money<\/span>,<span class=\"c0\"> both for the franchisee and the franchisor.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\" td-center aligncenter wp-image-17107 size-large\" title=\"image2\" src=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1024x715.png\" alt=\"How Does Franchising Work?\" width=\"696\" height=\"486\" srcset=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1024x715.png 1024w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-300x209.png 300w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-768x536.png 768w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1536x1072.png 1536w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-150x105.png 150w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-600x419.png 600w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-696x486.png 696w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1392x971.png 1392w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1068x745.png 1068w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1920x1340.png 1920w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-602x420.png 602w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-1204x840.png 1204w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-100x70.png 100w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2-200x140.png 200w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/image2.png 1999w\" sizes=\"auto, (max-width: 696px) 100vw, 696px\" \/><\/p>\n<h2 id=\"h.cbdpxzsh4jjd\" class=\"c14\"><span class=\"c5\">How do Franchises Work to Make Money<\/span><\/h2>\n<p class=\"c4\"><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/to-buy-or-not-to-buy-a-franchise-that-is-the-question\/&amp;sa=D&amp;source=editors&amp;ust=1671665046061751&amp;usg=AOvVaw0YbWEYoolFiyrVSde3I1TF\" target=\"_blank\" rel=\"noopener\">Buying into a franchise<\/a><\/span><span class=\"c0\">\u00a0is an excellent way of getting into your own business. Without the high costs and pressures, franchising makes business easy.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">This business model offers franchisees the opportunity to tap into a tried and tested company and, for established business owners, the opportunity to expand quickly with a minimum outlay of money and effort.<\/span><\/p>\n<p class=\"c4\">These days, there are a vast number of<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/franchise-opportunities-uk\/&amp;sa=D&amp;source=editors&amp;ust=1671665046062297&amp;usg=AOvVaw3fQZcLbHijktal20gvuAEE\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/franchise-opportunities-uk\/&amp;sa=D&amp;source=editors&amp;ust=1671665046062536&amp;usg=AOvVaw0UzcC_-rbNFOq5HBB_oSCI\" target=\"_blank\" rel=\"noopener\">franchise opportunities<\/a><\/span>\u00a0in every<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/&amp;sa=D&amp;source=editors&amp;ust=1671665046062746&amp;usg=AOvVaw2UIFBXZNeOkuL9hZRNVzP-\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/&amp;sa=D&amp;source=editors&amp;ust=1671665046062928&amp;usg=AOvVaw1qfJlgPQbzdiuQUe_6lq1F\" target=\"_blank\" rel=\"noopener\">industry<\/a><\/span>, from<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/fast-food-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046063162&amp;usg=AOvVaw0-RoGDVWHVN1psU0mtMOeq\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/fast-food-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046063382&amp;usg=AOvVaw2KuInR33Lai8AH0oaMGuHf\" target=\"_blank\" rel=\"noopener\">fast food<\/a><\/span>\u00a0to<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/care-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046063591&amp;usg=AOvVaw35aZxvrbX_5EBTMPUjyBBq\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/care-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046063801&amp;usg=AOvVaw0tcgbP903F0bEupgWxTmEm\" target=\"_blank\" rel=\"noopener\">essential care<\/a><\/span>, and\u00a0<span class=\"c9\">in the UK, the franchise sector is worth a whopping \u00a317 billion<\/span>. As well as being lucrative, the franchise business model is considered\u00a0<span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/how-many-franchise-opportunities-are-there\/&amp;sa=D&amp;source=editors&amp;ust=1671665046064116&amp;usg=AOvVaw2uc65rSX22g2lMmHRuqNC1\" target=\"_blank\" rel=\"noopener\">recession-proof<\/a><\/span>\u00a0since it tends to deal in<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/what-is-the-cheapest-franchise-to-start\/&amp;sa=D&amp;source=editors&amp;ust=1671665046064384&amp;usg=AOvVaw0Jjg6nBnJbv9hRLjM5ESMQ\">\u00a0<\/a><span class=\"c0\">low-cost, everyday purchases. Despite 2020\u2019s global pandemic, franchises thrived. \u00a0<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-9918\" title=\"How franchisors make money\" src=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money.jpg\" alt=\"How franchisors make money\" width=\"1200\" height=\"806\" srcset=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money.jpg 1200w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-300x202.jpg 300w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-1024x688.jpg 1024w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-768x516.jpg 768w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-150x101.jpg 150w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-600x403.jpg 600w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-696x467.jpg 696w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-1068x717.jpg 1068w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-625x420.jpg 625w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisors-make-money-20x13.jpg 20w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h2 id=\"h.881ygr4sfc82\" class=\"c12\"><span class=\"c19\">Franchising a Business<\/span><\/h2>\n<p class=\"c4\"><span class=\"c0\">Once a business is established and has a proven customer base, the natural desire is to expand. While progressing a business can be fruitful, it can also be expensive and complicated &#8211; particularly when trying to break into international territories.<\/span><\/p>\n<p class=\"c4\">For business owners,<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/advantages-disadvantages-of-franchising\/&amp;sa=D&amp;source=editors&amp;ust=1671665046065083&amp;usg=AOvVaw3pR8g6KIH1qDuT0hXGhHRn\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/advantages-disadvantages-of-franchising\/&amp;sa=D&amp;source=editors&amp;ust=1671665046065402&amp;usg=AOvVaw2xhxMDUvQuOAPJnzFXuSXD\" target=\"_blank\" rel=\"noopener\">the benefit of franchising<\/a><\/span>\u00a0is that it allows their brand to multiply without the hassle and expense often associated with doing so.\u00a0<span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchising-your-business-things-you-need-to-know\/&amp;sa=D&amp;source=editors&amp;ust=1671665046065658&amp;usg=AOvVaw1SEmP_hXXQC0zFv6K8zv__\" target=\"_blank\" rel=\"noopener\">Franchising<\/a><\/span><span class=\"c0\">\u00a0involves allowing individuals to buy into the business to increase the brand\u2019s reach.<\/span><\/p>\n<p class=\"c4\">For example, a successful hairdressing salon owner in London might offer a franchise opportunity in Manchester. This would involve an individual setting up a new salon in Manchester with the same branding, products and ethics of the original business. An excellent example of this would be<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.headmasters.com\/&amp;sa=D&amp;source=editors&amp;ust=1671665046066063&amp;usg=AOvVaw2S0NXvsJVef9XtmrgHielJ\" target=\"_blank\" rel=\"noopener\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.headmasters.com\/&amp;sa=D&amp;source=editors&amp;ust=1671665046066264&amp;usg=AOvVaw18WoiSrp9YpF1Ui4pseMyB\" target=\"_blank\" rel=\"noopener\">Headmasters<\/a><\/span><span class=\"c0\">, which now has 55 salons across the UK.<\/span><\/p>\n<h2 id=\"h.buvkgsdfoodn\" class=\"c14\"><span class=\"c5\">How Franchisors Make Money<\/span><\/h2>\n<p class=\"c4\"><span class=\"c0\">Another advantage of franchising a business is that it offers new ways to generate money with your existing business. Not only does it allow a company to expand into new territories and expose its brand to new customers, but it also allows it to make money directly from franchisees wanting to buy into a business\u2019s existing success.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">For the business owner, franchising can be highly lucrative. Here\u2019s how:<\/span><\/p>\n<h3 id=\"h.kek3hy4iwnn4\" class=\"c3\"><span class=\"ez-toc-section\" id=\"buy-in-fee\"><\/span><span class=\"c7\">Buy-in Fee<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\">When<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchising-your-business-things-you-need-to-know\/&amp;sa=D&amp;source=editors&amp;ust=1671665046066966&amp;usg=AOvVaw0U1NcNmXt8ogLKwJsQpaV2\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchising-your-business-things-you-need-to-know\/&amp;sa=D&amp;source=editors&amp;ust=1671665046067218&amp;usg=AOvVaw1YcyrCjIeHafPZfjVURnag\" target=\"_blank\" rel=\"noopener\">franchising a brand<\/a><\/span><span class=\"c0\">, the business owner will usually charge an initial buy-in fee which the franchisee must pay when signing the franchise contract. This fee will vary from brand to brand: buy-in fees can range from a couple of hundred pounds to several hundred thousand.<\/span><\/p>\n<p class=\"c4\">For example, the buy-in fee for a Headmasters franchise is \u00a340,000, whereas a<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/mindspan\/&amp;sa=D&amp;source=editors&amp;ust=1671665046067583&amp;usg=AOvVaw2ye13l2ZoMfAYd_b66zosN\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/mindspan\/&amp;sa=D&amp;source=editors&amp;ust=1671665046067773&amp;usg=AOvVaw1wQFmOylOP08OI-LRjwo4M\" target=\"_blank\" rel=\"noopener\">Mindspan<\/a><\/span><span class=\"c0\">\u00a0franchise costs just \u00a31,495.<\/span><\/p>\n<h3 id=\"h.didoeap23hqi\" class=\"c3\"><span class=\"ez-toc-section\" id=\"start-up-fee\"><\/span><span class=\"c7\">Start-up Fee<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\"><span class=\"c0\">As well as the rights to use the logo and branding, the franchisor will often provide several start-up services, which might include:<\/span><\/p>\n<ul class=\"c15 lst-kix_k9rpxjb69cpy-0 start\">\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Training<\/span>\u00a0&#8211; This helps a franchisee understand a business offering for the franchisee to sell the business\u2019s products or services effectively. Whether learning software for a<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/computer-tech\/&amp;sa=D&amp;source=editors&amp;ust=1671665046068331&amp;usg=AOvVaw0EZuTxWeagyx5K8GKpgzpd\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/computer-tech\/&amp;sa=D&amp;source=editors&amp;ust=1671665046068545&amp;usg=AOvVaw2Z-OpOWnPUJsJOrp96f71-\" target=\"_blank\" rel=\"noopener\">Computer, Tech &amp; Online Franchise<\/a><\/span>\u00a0or understanding the cleaning methods involved when operating a<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/cleaning-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046068852&amp;usg=AOvVaw1XvzqW1bxeM9NgwXdKOFtI\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/cleaning-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046069083&amp;usg=AOvVaw2v6jVMxJ06-AchAKcgwy6K\" target=\"_blank\" rel=\"noopener\">cleaning franchise<\/a><\/span><span class=\"c0\">\u00a0&#8211; a franchisor may charge a fee to provide this training.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Products<\/span><span class=\"c0\">\u00a0&#8211; A franchisor can sell its products to the franchisee to purchase and use. This will protect the franchisor from losing stock when franchising its business.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Equipment<\/span>\u00a0&#8211; Depending on the<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/&amp;sa=D&amp;source=editors&amp;ust=1671665046069655&amp;usg=AOvVaw0DNOjA3ZxcI9ZE1Uzw2PJo\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/&amp;sa=D&amp;source=editors&amp;ust=1671665046069875&amp;usg=AOvVaw2OIHmBXso8cBgHC6dcmPhv\" target=\"_blank\" rel=\"noopener\">industry of the franchise opportunity<\/a><\/span><span class=\"c0\">, it may require the use of specialised equipment. A franchisor may require payment to provide the equipment to the franchisee.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Uniforms<\/span><span class=\"c0\">\u00a0&#8211; Depending on the brand, uniforms may be required and part of the start-up fee. Examples of large franchises that use uniforms across their franchises include Costa Coffee.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Support<\/span><span class=\"c0\">\u00a0&#8211; One of the benefits for a franchisee is the ability to utilise an existing brand and business model to start a new business venture. This support comes in different forms and, sometimes, can require a lot of time from a franchisor, so they may want to charge for this support as part of a start-up fee.<\/span><\/li>\n<\/ul>\n<p class=\"c4\"><span class=\"c0\">The franchisee will pay for these services with what is known as a start-up package fee., For Headmasters, the initial investment was \u00a0\u00a3200,000, including the start-up and buy-in fees.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">Buy-in fees can often be less of an investment than starting a business from scratch. However, the entrepreneur should consider the decision and financial investment in detail.<\/span><\/p>\n<p class=\"c4\">You can choose from the<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/franchise-under-10k\/&amp;sa=D&amp;source=editors&amp;ust=1671665046070722&amp;usg=AOvVaw11sf7pc9hS65ahvsAtf5XG\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/franchise-under-10k\/&amp;sa=D&amp;source=editors&amp;ust=1671665046070935&amp;usg=AOvVaw1xoi0CCnau81F_6zrZuzfG\" target=\"_blank\" rel=\"noopener\">investment cost<\/a><\/span>\u00a0using our<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/uk-franchise-directory\/&amp;sa=D&amp;source=editors&amp;ust=1671665046071184&amp;usg=AOvVaw04Eitp_yhI_2mMfrVRuXMi\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/uk-franchise-directory\/&amp;sa=D&amp;source=editors&amp;ust=1671665046071414&amp;usg=AOvVaw0X9FPb0KURFkPfK5ATo0Kr\" target=\"_blank\" rel=\"noopener\">franchise directory<\/a><\/span><span class=\"c0\">\u00a0today.<\/span><\/p>\n<h3 id=\"h.6ihpmu49v0b\" class=\"c3\"><span class=\"ez-toc-section\" id=\"royalty-fees\"><\/span><span class=\"c7\">Royalty Fees<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\"><span class=\"c0\">Once a franchisee is up and running, they will be required to pay royalty fees to the franchisor. A royalty fee is an ongoing fee that a franchisee pays the franchisor. This fee could be paid weekly, monthly, or quarterly, depending on the agreement between the two involved.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">These fees are commonly paid monthly and, in most cases, will be calculated based on a percentage of takings from the franchisee\u2019s business.<\/span><\/p>\n<h3 id=\"h.tgr5remh7ytq\" class=\"c3\"><span class=\"ez-toc-section\" id=\"add-on-fees\"><\/span><span class=\"c7\">Add on Fees<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\"><span class=\"c0\">In some cases, a franchisor will charge additional fees to cover ad hoc items such as<\/span><\/p>\n<ul class=\"c15 lst-kix_svqw3m3ly0al-0 start\">\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Advertising<\/span><span class=\"c0\">\u00a0&#8211; This is where a business or organisation communicates their products or services to potential customers through paid opportunities. It is one of the most effective ways to promote brand awareness.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Manufacturing<\/span><span class=\"c0\">\u00a0&#8211; The process of creating a product. This involves costs for which a franchisor may require a franchisee to pay additional fees.<\/span><\/li>\n<li class=\"c4 c10 li-bullet-0\"><span class=\"c9\">Ingredients<\/span>\u00a0&#8211; Certain industries, such as<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/food-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046072669&amp;usg=AOvVaw1gILBNBYUWeySn2FkgWqlC\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/industries\/food-franchises\/&amp;sa=D&amp;source=editors&amp;ust=1671665046072898&amp;usg=AOvVaw18hMPvh_z7MPrn0MsAhC1c\" target=\"_blank\" rel=\"noopener\">catering and food franchises<\/a><\/span><span class=\"c0\">, may require ingredients as part of their business which sometimes is charged by a franchisor.<\/span><\/li>\n<\/ul>\n<p class=\"c4\"><span class=\"c0\">For a franchisor, the buy-in and start-up fees, coupled with ongoing royalty fees, can provide a significant income; mainly when multiple franchises come into play.<\/span><\/p>\n<p class=\"c4\">A franchisor only makes money when the franchisee does. As such, it&#8217;s imperative to offer comprehensive training and support to ensure that the<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/the-top-20-franchise-examples-of-2021\/&amp;sa=D&amp;source=editors&amp;ust=1671665046073355&amp;usg=AOvVaw3BUAhrmVA38LIyc23r2WkK\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/the-top-20-franchise-examples-of-2021\/&amp;sa=D&amp;source=editors&amp;ust=1671665046073586&amp;usg=AOvVaw1dNxt4xrjCUyMy9r2sJrji\" target=\"_blank\" rel=\"noopener\">franchisee is successful<\/a><\/span><span class=\"c0\">.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-9917\" title=\"How franchisees make money\" src=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money.jpg\" alt=\"How franchisees make money\" width=\"1200\" height=\"801\" srcset=\"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money.jpg 1200w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-300x200.jpg 300w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-1024x684.jpg 1024w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-768x513.jpg 768w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-150x100.jpg 150w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-600x401.jpg 600w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-696x465.jpg 696w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-1068x713.jpg 1068w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-629x420.jpg 629w, https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-franchisees-make-money-20x13.jpg 20w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h2 id=\"h.4z1d5y7hhign\" class=\"c16\"><span class=\"c5\">How Franchisees Make Money<\/span><\/h2>\n<p class=\"c4\">An entrepreneur has a lot to<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/eight-essential-factors-to-consider-before-you-buy-a-franchise\/&amp;sa=D&amp;source=editors&amp;ust=1671665046074194&amp;usg=AOvVaw1sK5K2ZX9TnnlhfOw9y9mz\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/eight-essential-factors-to-consider-before-you-buy-a-franchise\/&amp;sa=D&amp;source=editors&amp;ust=1671665046074453&amp;usg=AOvVaw223i9zDDHuVXNicAAMmb6s\" target=\"_blank\" rel=\"noopener\">consider before buying a franchise<\/a><\/span><span class=\"c0\">. There\u2019s no doubt that a franchisee will often be required to make a significant investment when purchasing into a franchise. The franchisee must pay this investment back to a bank or financial organisation.<\/span><\/p>\n<p class=\"c4\">While this is very much the case, the critical word here is \u2018investment\u2019 as significant income can come from a franchise business. When<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/how-much-money-is-required-to-open-a-franchise\/&amp;sa=D&amp;source=editors&amp;ust=1671665046074902&amp;usg=AOvVaw0DzW3iWatFWiWYcG_l3429\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/how-much-money-is-required-to-open-a-franchise\/&amp;sa=D&amp;source=editors&amp;ust=1671665046075128&amp;usg=AOvVaw0l52SZbfbCbpLaHSF-rvL7\" target=\"_blank\" rel=\"noopener\">buying into a franchise<\/a><\/span><span class=\"c0\">, the franchisee will pay a lump sum of cash in the form of buy-in and start-up fees. These fees give the franchisee access to the company\u2019s logo, branding, and all of the products, equipment, and support they need to get started.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">For the franchisee, franchising can be highly lucrative. Here\u2019s how:<\/span><\/p>\n<h3 id=\"h.mjjkbohdzvkh\" class=\"c3\"><span class=\"ez-toc-section\" id=\"making-sales\"><\/span><span class=\"c7\">Making Sales<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\"><span class=\"c0\">Once a franchisee has their business up and running, they can take advantage of the brand\u2019s established reputation and ongoing promotion, advertising, and support, making attracting customers much easier than it would be when going it alone.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">The franchisee will make money through profits gained through sales. Although the franchisee will pay a percentage of this to the franchisor through royalty fees, the successful franchisee can make significant money by selling the brand\u2019s products or services.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">Of course, \u00a0the more sales the franchisee makes the more income. A franchisee can expect to work with the franchisor to ensure adequate investment in promotion and advertising.<\/span><\/p>\n<h3 id=\"h.hff6ia65jrrr\" class=\"c3\"><span class=\"ez-toc-section\" id=\"adding-franchises\"><\/span><span class=\"c7\">Adding Franchises<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p class=\"c4\"><span class=\"c0\">When a franchisee has achieved success with their business and has proven their commitment to the brand, the franchisor will often encourage them to expand by buying other franchises.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">Franchisors will always value hard-working, successful franchisees and offer incentives such as discounts to make it easier for the franchisee to expand. This is an excellent opportunity for the franchisee to maximise their profits and gain an increased market share within their community.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">This expansion gives the franchisee additional financial freedom and the chance to build a nest egg for retirement.<\/span><\/p>\n<h2 id=\"h.gx8098e8k801\" class=\"c4 c18\"><span class=\"c5\">In Conclusion: Tackle Franchises Today<\/span><\/h2>\n<p class=\"c4\">The franchise industry continues to gain popularity, not just among ordinary folk. Many celebrities have tapped into this money-spinning industry, including Magic Johnson, Shaquille O\u2019Neal and Chris Brown, who owns 14<span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/company.bk.com\/franchising&amp;sa=D&amp;source=editors&amp;ust=1671665046076463&amp;usg=AOvVaw1Fp-Gei1OdhEMQRGTraG0j\" target=\"_blank\" rel=\"noopener\">\u00a0Burger King restaurant franchises<\/a><\/span><span class=\"c0\">.<\/span><\/p>\n<p class=\"c4\"><span class=\"c0\">As with any business, there are no guarantees for a franchise&#8217;s success. Any business requires an investment of money, time, \u00a0and hard work. This works both ways:<\/span><\/p>\n<p class=\"c4\"><span class=\"c9\">For the franchisor<\/span><span class=\"c0\">\u00a0&#8211; Ensuring your business is well established is vital before you even think about franchising your business. To make money from your franchisees, \u00a0arm them with the tools they need to succeed &#8211; offering plenty of training and support to help them get started.<\/span><\/p>\n<p class=\"c4\"><span class=\"c9\">For the franchisee<\/span><span class=\"c0\">\u00a0&#8211; Investing in a franchise ticket isn\u2019t buying a one-way ticket to the easy street; you\u2019ll need to be prepared to put in long hours and a lot of hard work to get your business off the ground, including a focus on promoting your business.<\/span><\/p>\n<h2 id=\"h.azgigjhszz5o\" class=\"c14\"><span class=\"c5\">What does Franchising offer me?<\/span><\/h2>\n<p class=\"c4\">Are you on the hunt for a new business opportunity and want to learn more about the benefits of franchising or buying a franchise? Check out\u00a0<span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/&amp;sa=D&amp;source=editors&amp;ust=1671665046077717&amp;usg=AOvVaw3Olg9FjrkImuxg4sNo0vPF\" target=\"_blank\" rel=\"noopener\">Franchise Local\u2019s<\/a><\/span>\u00a0expert<a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchising-tips-and-advice\/&amp;sa=D&amp;source=editors&amp;ust=1671665046078093&amp;usg=AOvVaw2Jd7UAEjTrfI9apws_XdLc\">\u00a0<\/a><span class=\"c2\"><a class=\"c1\" href=\"https:\/\/www.google.com\/url?q=https:\/\/www.franchiselocal.co.uk\/news\/franchising-tips-and-advice\/&amp;sa=D&amp;source=editors&amp;ust=1671665046078477&amp;usg=AOvVaw0hAkT7PEbOuUjHIgDtTLgq\" target=\"_blank\" rel=\"noopener\">franchising advice and tips<\/a><\/span><span class=\"c0\">\u00a0today.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There\u2019s a lot of pressure on businesses to show evidence of a commitment to their communities and the environment. Companies worldwide work hard to meet these growing demands. For those looking to start up their own business, it can take time to tick these boxes while simultaneously making money. Starting a business can be one [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":9916,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1467,29],"tags":[],"class_list":["post-9915","post","type-post","status-publish","format-standard","has-post-thumbnail","category-franchise-information","category-tips-advice"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.franchiselocal.co.uk\/news\/wp-content\/uploads\/2021\/06\/How-does-a-franchise-make-money.jpg","_links":{"self":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts\/9915","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/comments?post=9915"}],"version-history":[{"count":0,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/posts\/9915\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/media\/9916"}],"wp:attachment":[{"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/media?parent=9915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/categories?post=9915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.franchiselocal.co.uk\/news\/wp-json\/wp\/v2\/tags?post=9915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}