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What should be in the franchise package

Written by: Diarmuid Kieran

Article Overview: What are the elements in the franchise package

What should be in the franchise package

The franchisor brings together in the franchise package the elements of the business, reflecting the accumulation of his/her total operation in a form that can be transferred to franchisees. In the package the franchisor defines the structure of the business format and the nature of the relationship between franchisor and franchisees. This relationship is usually documented in the franchise agreement and the operating manual.

While many elements of franchise systems are similar, there are differences in the packages offered by different franchises. It is understandable that the franchise package of a fast food franchise would be different of that of a van-based cleaning business. The following elements are those one would expect to find in a franchise package. The exact nature of some elements is dependent on the franchise in question.

Use of the franchise's trademark and copyright materials.
The franchisor's name and logo are a vital part of the franchise package. In granting a franchise, a franchisor gives franchisees the right to use his/her name and logo for the defined business. It is important therefore that the franchisor has undisputed rights to them and has taken all possible steps to protect them before allowing others to share in their use. This may involve registering the name and logo as well as protecting certain other aspects of the business through patents and copyrights.

Know-how relating to site selection.
Franchisors provide property-based franchisees with expertise in assessing and acquiring suitable sites. Assistance may include advice on the type of location, size of premises required, rent, rates and lease terms.

Training.
Many successful franchises depend on franchisees being able to run the business with no prior business experience. As part of the franchise package, it is essential for the franchisor to provide franchisees with the knowledge to operate the business successfully through initial training. Training must subsequently be updated to reflect changes in the way the business is conducted and the nature of new or changing competition.

Territorial rights.
The franchisee usually buys an area or territory as part of the franchise package. The franchisor designates to the franchisee exclusive rights to his/her territory within which no other franchisees in the network can operate.

Product supply arrangements.
Often identification of suppliers, negotiation of terms and the provision of products or services to the franchisees form an integral part of the business formula. It is important at the outset to determine the range and the degree of flexibility that the franchisee will be allowed in his/her individual unit.

Personnel procedures.
Assuming that the franchisee has little or no knowledge of personnel matters, the franchisor will need to devise procedures and training in areas such as recruitment, staff training, motivation and administration including, for example, the payroll system.
Accounting procedures. Frequently the franchisor will stipulate a particular accounting system that must be used by all franchisees. This allows the franchisor to audit the franchisees more easily. In some cases the franchisor will provide a centralised book-keeping service which franchisees must use.

Marketing aids.
Marketing is one of the key elements of the franchise package. Franchisees will expect the franchisor to develop a range of marketing materials and activities such as advertising, in-store promotions and PR. This is an area where, through the centralised pool of money contributed by all franchisees in the network as well as the franchisor, franchisees will enjoy significant benefits in comparison with independent competitors.

Ongoing services.
Although the franchisor puts significant effort into recruiting new franchisees, franchising is very much a long-term relationship and a very important part of the franchise package is the ongoing support provided by the franchisor to the franchisee. The list of supports can be extensive. The most common on-going supports include the provision of general business advice and field assistance, including regular meetings, monitoring the franchisee's performance and regular training.

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Related Forum Posts
Re: Which franchise would you buy? - Hi Kevin, On a silly and romantic level I would just like to be involved with a football franchise, preferably my beloved Newcastle United FC who I have supported since I was a little boy and they never win anything. Unfortunately football clubs are not a franchise in the UK so that is unlikely to ever happen, SOB. On a more serious level, all I would say to anyone thinking of a franchise is to research, research and research again. You have to remember that franchisors are trying to sell you a package which in many cases is a very expensive one. They will give you names of existing franchisees who may or may not be hand picked but the most important advice I would give anyone is to agree the costs going forward and not just the up front costs. Franchises demand a lot of hard work and effort over time and if you already know the industry you will be working in then fine. Many years ago I had a franchise selling brilliant cleaning chemicals from the back of a showroom vehicle which was great except that I could only buy the chemicals from the franchisor and after a few years of rising prices I had to fold the business because the cost of buying the chemicals meant my profit margins were too small to carry on. It was a very sad decision for me because I loved the lifestyle and the industry that I was working in even though I was usually working a 10-12 hour day and doing paperwork at home as well. If I did the same again I would do it with a contractual agreement to fix my costs for the first two to three years while I was building the business but it’s easy to say that with hindsight. There are some very good franchises out there but remember that franchisors are selling you a package. If your business fails they will just sell the same package to the next person who takes over your patch and you have lost your money so it’s very much buyer beware, regards, Mal.
first steps - look at similar companies to see what they offer in their franchise package and to compare it to what you think you are offering.
Re: need pricing help please - Andy, I looked up Kunaki.com and from what I can tell, it looks like they only do CDs and DVDs. My course package includes several books as well as CDs. Although, their pricing is less than Lulu.com for the CDs. Do you know of a company that would produce, package and ship the books and CDs? It seems as though this is still something I might need to do from home; gather the components and package and ship on my own. I really would prefer to do it a different way. Nancy
Re: Suggestion for an Entrepreneur Looking for Funding - Hi Chris, Did you professionally package up the information? Lenders are picky and most will not even bother to look at a loan package if it is not done correctly. The odd thing about it is that they don't typically tell you how to present it, so your left with the research. Did you get financed?
Hello I am a franchise expert - Hello, I recruit franchise owners for successful franchise concepts based in the USA. Many of my franchises are looking to expand north to Canada in all major centers. I enjoy networking and answering questions about franchising. If anyone is interested in the franchise world or looking to buy a franchise then contact me. I have a wealth of information and like to help. Thanks for your time. Michael Somer


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