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Is it Ethical for a Franchiser to Sell his Concept as a Franchise?

Written by: Sebastien Page

Article Overview: From a practical point of view, a franchiser who has found success selling the services and products of franchising outlets for public consumption, has a pretty rewarding business concept which is potentially profitable if sold. However, this is not applicable in all cases and it’s especially risky to assume so if you’re a franchise buyer.

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Is it Ethical for a Franchiser to Sell his Concept as a Franchise?

From a practical point of view, a franchiser who has found success selling the services and products of franchising outlets for public consumption, has a pretty rewarding business concept which is potentially profitable if sold. However, this is not applicable in all cases and it’s especially risky to assume so if you’re a franchise buyer. Many franchisers though would argue that if they have in fact meticulously crafted a successful business model over years of hard work, then they certainly have every right to sell it to others who would like a shot at this sort of success in the franchising business world.

However, selling is not a particularly good decision for someone who hasn’t been a franchiser for long. Many franchising consultants would cringe at the idea of a rookie franchiser adamant on the idea of selling their franchise, despite not even having sufficient time to perfect a business model. This is an especially unwise decision if not enough capital is on hand. This is because franchising a concept takes a few millions, at the very least. These millions don’t last very long, either if the franchiser isn’t careful and cautious with every penny coming out of his/her pockets.

Selling your business concept as a franchise should be preceded by enough years of very hard work, a successful tried and true business model and a solid capital in the bank. So before making that move, consult an expert and carefully assess your condition before making a huge mistake in more ways than one.

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Article Tags: business concept, business model, business world, franchise buyer, franchiser, franchisers, franchising business, mistake, pockets, point of view, public consumption, rewarding business, selling your business, successful business, true business, unwise decision

About the Author: Sebastien Page
RSS for Sebastien's articles - Visit Sebastien's website

Sebastien Page is Director of Marketing for WorldFranchising.com, the most comprehensive information resource for potential franchise buyers. The company also publishes franchise best sellers such as Bond's Franchise Guide, and Top 100 Franchises Guide. Before joining WorldFranchising.com, Page was Marketing Manager for Franchise.com where he successfully led the Marketing Department. Sebastien Page is very active in the franchise community and he often writes about franchising, sales and marketing.

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Re: New member from the USA - [quote="Ethical":cf54b60n][quote="Mal Tindle":cf54b60n]Hi Ethical, Welcome to the forum, it's good to see new people getting involved in any forum and you have picked one of the very best. I haven't been a member too long but am a regular now because of the support and resources available here which are most impressive. I see you work in the recycling of ink cartridges and I wish you well with that and attracting traffic to your site. best wishes, Mal.[/quote:cf54b60n] Thanks for your welcome,Mr.Mal,are you located in the USA,or the UK o'GB.or some other locale?,and if may I have your permission to ask,What kinda(kind of) entrepreneurship are you involved with?,as anything in life,education,and correct info...is the key to success,and Profesional forum attendance,is enlighting.Thanks again for your welcome.[/quote:cf54b60n] Hi Again Ethical, Thank you for your reply, I live in the UK and don’t have a product as such to sell like you but I am an Internet Marketer and owner of the ‘Work From Home Gems’ site below. I specialise in finding and recommending different ways to make money on the internet as an affiliate. I very much enjoy working in this sector and hope to work full time from home in the future. Don’t forget to set up your signature as recommended by GT above as this is a simple way to ad the URL of your website and this will show on every post you make, best wishes, Mal.

Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands

Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.

how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]

Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.

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