Buy a Franchise

 

Franchising is a business agreement between a franchisor, the business owner, and a franchisee, a potential business owner. Franchisees pay a royalty and often an initial fee for the right to operate under the franchisor's brand and system. By entering into this contract, the franchisee gains the rights to sell the franchisor's products, goods, or services and utilise the brand's designs, marketing materials, and promotions. They also benefit from the franchisor’s quality control, training, advertising, promotions, accounting systems, and operating procedures. Franchisees help expand the brand's reach and market presence by supplying their own capital and efforts to open new locations, while the franchisor provides initial training and ongoing support.

 

Often, the franchisor supplies the goods or services for the franchisee. In businesses like hotels or travel agencies, the franchisee is also part of the franchisor’s worldwide reservation system. When done correctly, brand franchising creates win-win relationships. As your franchise system grows, everyone benefits from economies of scale, increased brand recognition, and continuous system improvements.

 

As a franchisor, you create new revenue streams from initial franchise fees, ongoing royalties, and other system-generated revenues. Brand franchising helps you scale and grow your business far beyond your current operations. It is one of three business strategies a company can employ to gain market share, along with using company-owned units or a mix of company-owned and franchised units.

 

Franchising is a strategy for acquiring and retaining customers, creating a strong image in the minds of current and future customers about the company’s products and services. It is also a method for distributing products and services that meet customer needs.

 

Franchising is a system of interconnected business partnerships that enables various individuals to utilise the same brand identity, a proven business model, and an effective marketing and distribution framework.

 

For individuals or investors keen to buy into a franchise, we highly recommend attending the WSQ Franchise & Business Ownership course. This course helps you understand the roles and responsibilities of franchisors and franchisees, perform investment appraisal techniques to assess the suitability of franchise investments and implement, oversee, and evaluate procedures for franchise setup and operational plans.

Franchisor benefits

Franchises offer an alternative to chain stores with several distinct advantages. They allow a company to distribute goods in many locations while avoiding large investments and liability. 

Franchising enables companies to expand more rapidly than the chain store model because the costs for the franchisor are much lower when new branches are owned and operated by a third party. The franchisor receives two initial payments: payment for training and other services provided to the franchisee, as well as a royalty fee for the use of the trademark.

However, a potential drawback to franchising is that revenue growth may be more limited since the franchisor only receives a percentage of the earnings from each branch.

Franchisee benefits

The franchising model allows franchisees to rapidly establish a business using a well-known trademark, giving them instant access to the necessary tools and infrastructure for success. Unlike direct employees of the franchisor, franchisees are typically more motivated to succeed because they have a direct stake in the business.

For those looking to buy into a franchise, the advantages are clear: immediate brand recognition and a tested business model. Buy into a franchise to leverage existing customer loyalty and market presence, ensuring a higher likelihood of success from the start.

The franchisor receives two initial payments:

  • A royalty fee that covers use of the trademark
  • Payment for training and other services that the franchisee receives
  • A drawback to the franchising model is that the potential for revenue growth is more limited because the franchisor only gets a percentage of the earnings from each branch.
  • Franchisee benefits
  • With the franchising model, franchisees can set up a company quickly based on a proven trademark and has immediate access to the tools and infrastructure needed to succeed.
  • The franchisees normally have a greater incentive to be successful than direct employees of the franchisor since they hold a direct stake in the business.