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What is a franchise?

Written by: Nick Strong

Article Overview: Business format franchising in a nutshell is the documenting and replication of a proven business formula. In order to franchise a business it must not only be successful but have a good trading history under its belt...

What is a franchise?

Business format franchising in a nutshell is the documenting and replication of a proven business formula. In order to franchise a business it must not only be successful but have a good trading history under its belt.

The method by which the business succeeds will be written down in an operations manual and trade marks will be registered to protect the brand. This is the franchise system’s know-how or intellectual property. This becomes the determining formula as to how a market can be exploited and forms a business that is valuable for those who follow it energetically. Typically is it the difference between running a McDonald’s restaurant or a Joe’s burger joint. The brand of the franchise should have good public awareness, tried and tested support and systems in place, and consequently be more likely to succeed than a conventional business.

The franchising industry now brings over £10 billion into the UK economy and this has increased by double over the last 10 years. Indeed, the only conclusive franchise sector survey conducted annually by the BFA & NatWest Bank, show a dependable figure of around 90% of owners who are running franchised business on a self-employed basis remaining successful year after year.

Curious to find out more about franchising? Check the British Franchise Association website or browse one of the many franchise directories that can be found on the web or relevant franchise publications.

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Article Tags: 10 years, amp, bfa, british franchise association, business format, conventional business, franchise directories, franchise publications, franchise sector, franchise system, franchised business, intellectual property, mcdonald, natwest bank, nutshell, operations manual, public awareness, replication, rsquo, uk economy



Related Forum Posts
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
Re: Franchising Brokers vs Franchising Consultants - Franchise consultants are free and work with you without any obligation. they do not work for any one franchise but do get a percentage of the franchise fee when a franchisee that was registered with the franchise came from the consultant and the franchisee signs. They will try to match up your interests and skills to franchise businesses that are right for you. They can explain franchise guidelines and help you in any way they can. Franchise brokers usually get paid by the client and/ or franchise (generally get some type of commission). Additionally, they can get points or referral fee off the deal if they refer you to a lending resource too after they sell you on a franchise. Typcally they will try to sell a prospective franchisee on a larger deal so they get a larger commission.
Re: Which franchise would you buy? - The franchise to buy, the one that will succeed is the one that is either underrepresented or not represented in the community. Look at your community, identify what service is missing. That is the franchise to pursue. Too many people buy a franchise based on their "heart". A franchise is a "widget". I have found that once people began to investigate a franchise they had never thought of, but find their is a need; the entrepreneurial "gene" kicks in and they get excited. They began seeing the possibilities of success, and as they uncover the nuances of the franchise, they become more interested. It is the uninformed that are uninspired.
What is the Best Franchise? - As a Franchise Consultant I get asked this question on a daily basis. I work with clients to help them find the right franchise and through those conversations they almost always as me: "What is the Best Franchise?". There is no single answer for this question as the answer truly depends on the criteria you set as a perspective franchise owner. Meaning, maybe you want a retail location with 5 employees or a home based franchise with zero employees. Either way, the word "best" becomes relative to what is important to you. I realized quite some time ago that I could never "sell" a franchise to anyone. The only way someone will buy a franchise is if it makes sense for them & their family. Performing the proper due diligence is key to finding the best franchise for you.
Re: Franchising Brokers vs Franchising Consultants - I don't think you can really prevent this from happening but you must certainly be careful when you choose your franchise broker. My suggestion would be to talk to a broker from a reputable network such a FranChoice or FranNet. These people are good people. I guess you can tell right away if the broker is trying to get you to buy a specific franchise. If he tells you right off the bat that you "have to" buy XYZ franchise, well, to me it sounds like he's trying to "scam" you. On the contrary, if he really listens to you, really consult you and try to find out what's best for you, you will probably be able to tell. When I worked for Franchise.com, we had a brokerage unit called FranFit. The beauty of FranFit was that we were paid the same commission by the franchisor, whatever his industry or franchise fee. This way, there was no incentive for us to match a potential franchisee with a franchise or another. We were truly leveling the playing field and really looking for the right franchise fit for the buyer AND the seller.


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