The small business specialists
Phone: 13 12 49
Franchising is the practice of using another firm's successful business model. A business owner (a franchisor) assigns independently owned outlets (a franchisee) the right to market and distribute their products or services.
For a fee, the franchisor grants the right to operate a replicated business under a trademarked name, using established management techniques, marketing and operational procedures.
In addition to this upfront capital fee, the franchisee is normally required to pay ongoing royalty fees and/or a percentage of gross monthly sales and agrees to comply with franchising procedures.
If you are considering franchising as a form of expanding an existing business, you will need assistance from a team of professionals, including your accountant, solicitor, banker and franchise consultant.
The successful franchising of any business requires careful planning. The cost and time involved in the process of franchising depends on the complexity of the business, the proposed system and the current position.
The process is likely to include:
Then if you decide to proceed:
There are three major types of franchise models:
This is the model that people most commonly think of as a franchise. As the franchisee you would be given the rights to use the franchisor's intellectual property in your own business. An example of this model is a fast food outlet.
This is where the franchisee sells the franchisor's product from a wholesale or retail outlet. As the franchisee you would be given exclusive rights to sell the product within a specific area. An example of this model is a motor vehicle dealership.
In this model the franchisee produces the product. The franchisor provides an essential ingredient or "know-how" to the franchisee. An example of this model is the soft-drink industry.
Talk to the Franchise Council of Australia for more information on franchising your business.