Franchise Business Template: Things to Know about Franchising


Are you interested in franchising then you should understand the business. The use of an established business model for an agreed period is what franchising is all about.
The business format reduces liability and investment cost while leveraging on an organized structure. The template works because the franchisee has a direct stake in the success of the business
Franchising is regulated by state laws and legislature. Startups for franchised chains differ according to contractual arrangement, industry and company policy.
There are many business models such as commercial cleaning startup cost of $11,000-$35,000. Others are fast food chains $900,000-$2,000,000and convenient stores/gas stations gulping $2,000,000-$8,000,000.
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The Business Model
The business model for a franchise is exclusive, sole or non- exclusive arrangement. The entrepreneur looking to become a franchisee has a few things he needs to do.
Once accepted as a franchisee you go through some training. The mother company also provides support and promotional material.   
The franchisor collects several fees and also earns a percentage of your sales. So they have a vested interest in the success of your enterprise. The fee might be a single lump sum or front end fee.
Branding and Trademark
The parent company has gone through the rigors of establishing their brand names. The franchisee benefits by paying a royalty to use the trademark.
Fees and Contractual Agreements
The business models and structures differ according to industry and company. Franchisee fees range from 5.5%-10%. Some include a portion and marketing fee of 2.5%. The fees are usually calculated based on gross revenue from sales.
Franchise Brokers
If you are interested in becoming a franchisee and you don’t know how use a franchise broker. There are many industries that offer entrepreneurs franchise arrangements.
Major industries are fast-food establishments, hotels, hospitals, and gas stations. Other business models are convenient stores, cleaning agencies, restaurants and truck stations. Franchise brokers aid franchisee find franchisors in the industry they prefer.
Different Types of Franchising
Franchising is getting more dynamic each day with new exciting models that don’t conform to the mainstream format. We now see third party franchising, social franchising and event franchising. Another interesting template favored by many is the home based franchise
The Home Based Franchise
Home based franchises are very popular because of the simplicity, small financial involvement and success rate. The franchise duplicates successful home based businesses.
 The entrepreneur needs to overcome a few challenges such as finding customers. Using a well known trademark although helpful is no guarantee for sales or success.
Logistics and Transportation
Logistic and Transportation Company franchising provides valuable service to companies. The business is very lucrative and needs lots of inventory management and shipping. Third party logistic franchising is just one among new franchising models that work.
Television Program Franchising/Syndication
It is not uncommon to see popular television programs shown using local content in many countries.  The investor buys the franchise and recreates the show using local content.
They use the trademark and branded name. Franchising event is another one gaining momentum in the industry. Major forums, trade fairs, symposiums and seminars use franchising.
Obligations
Franchisees are required to conduct business according to the brands provisions. They are also mandated to protect the trademark and business concept.
The franchisor demands certain high standards because they carry the trademark of the parent company.
 Everything is regulated including office design, colors and staffs wear. The franchisor provides the equipment, technical skills and raw materials.
The core arrangement depends on the business structure of the franchisor. An obligation by the franchisor includes adequate training and valuable resources to his franchisee.
Franchising Code of Conduct
1.     They need to act in good faith.
2.    There should bee transparency between both parties.
3.    There are serious penalties of breaches of code
4.    Full disclosure is required
5.    There are laws that protect intellectual property, trade practice and contractual agreements
6.    The franchisee is give the right to use the franchisors trademark and colors
7.    Remittance of payment and royalty including permits are captured in the contract
8.    Some countries allow some tax deductions
Guidelines for Franchisors
1.    The franchisor should provide training for franchisee
2.    They are liable to suppliers
3.    They need to identify principal officers and company structure
4.    They need to provide instructions on use of trademark and permits.
5.    Provide a confidentiality agreement
6.    They are at liberty to terminate any agreement
7.    The franchisor needs to provide full details about franchisee fees.
8.    Mandatory registration on a public registry
9.    They need expert legal advice
More disclosures are summary of business history and description of local market. The franchisor can include a two years financial statement.  
The franchisor should create a comprehensive list of networks, renewals and terminated contracts. They need to write and register the franchise agreement.
Franchisors in the United States of American are mandated to provide Franchise Disclosure Document to franchisee.


Why Franchising Works
Franchising works because it a god way to get more capital and creates a large distribution chain. The franchisor gains because he still has full control of his establishment. Using this business model rapidly expands the business with little risks or capital involvement.
Conclusion
To succeed you need to develop a business plan. The franchisee needs to negotiate the license carefully and purchase discounted equipment.
 Use a lawyer to unravel the document to see full disclosure or any hidden fees. The problem with franchise agreements is that they don’t have warrantees, are unilateral and favor the mother company.



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