What is a franchise business model?

Most people are aware of the big food franchises like KFC, McDonalds etc but do not realise how many industries franchising covers or indeed what is a franchise business model.

A franchise business model can be any type of business and is basically an agreement to use the same intellectual property ( branding ) and the same tried & tested method to either provide a service and/or sale of goods. Usually a local franchisee ( Franchisee ) would be granted an area to trade ( territory ) and trained and supported by the creator of the franchise business model ( Franchisor ) to launch and grow the business in the territory.

How do you set-up a franchise business model?

Firstly you need a successful business with a proven brand and business model. Then you need to be able to demonstrate that you can transfer these skills/demand in multiple areas and have the internal infra-structure to support the people that invest in your franchise. Assuming you have done this you will need to carry out the following to franchise a business;

  • Business plan & financial modelling based on actual accounts for both the Franchisor & Franchisee franchise business models
  • Intellectual property protection – If you have not already done so you will need to protect your logo, trading name etc
  • Franchise documentation – There is a lot of this that needs to be completed including deposit agreements, NDA, franchise agreement(s), franchise operations manual, training manuals.
  • Marketing & franchisee recruitment strategy – Recruiting new franchisees is a very difficult task and you will need a great source of leads to grow your franchise
  • Support – New incoming franchisees will need to be trained and receive a lot of day to day operational support so you need to ensure you have sufficient resources.

To find out more about what a franchise business model is and how you can franchise your business complete the enquiry form below for a free initial consultation with one of our franchising experts.

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