Entrepreneurship is one of the most profitable sectors. But to succeed in this field, it is not enough to create a single business. It is also necessary to relocate it, and franchising is the best solution for this. But then, what is it about? And how to become a franchisor?
Being a franchisor: what is it?
In order to understand the term "franchisor", we must first define what a franchise is. By definition, a franchise is a contract between two entities (the franchisor and the franchisee) with the aim of developing the franchisor's business or brand. To put it simply, the franchisor will give the franchisee the right to use the brand. The franchisee will then be able to exploit it and make a profit from this activity. In return, the franchisee must pay direct or indirect royalties to the franchisor. It is therefore a kind of distribution contract. The franchise system is very similar to that of a subsidiary. However, the franchisee has autonomy of management and administration. He is therefore not attached to the franchisor company, although the latter may have some control over his franchisee. By this explanation, a franchisor is therefore the one who gives the trademark license, i.e. the one who concedes the use of the trademark to a third party. If the franchise system is very beneficial for the franchisee, it is also beneficial for the franchisor. Indeed, the franchisor can develop his business, extending his activity all over the world, without having to spend the totality of the investment (the financing of the franchise is shared between the two parties).
What are the requirements to become a franchisor?
In principle, any legally constituted company can become a franchisor. However, there are certain criteria that must be met in order to form an effective franchise network. First of all, the franchising company must have a certain notoriety in order to attract potential franchisees. The purpose of the franchise is above all to make a profit. The franchisee will therefore only want to enter into a franchise agreement with a company that is well known and financially well placed. Secondly, the franchisor must be able to transmit its know-how to the franchisee. Although the franchisee is not an integral part of the company, it still plays an important role in its development, especially when it bears his name. The franchisor must therefore train and assist him so that the franchised company, in turn, grows quickly. In this way, it will always be able to maintain a positive image with consumers. Finally, it is necessary to establish an innovative, strategic and convincing concept.
What are the steps to follow to become a franchisor?
The first step in becoming a franchisor is to develop a marketing plan. It is necessary, therefore, to study the strategies to be used, especially at the relational level. It is also necessary to determine the profiles of adequate franchisees, as well as their mode of recruitment. Once this is done, we must move on to the practical stage, i.e., finding potential franchisees. To do this, you must be able to convince and negotiate. However, you must be careful to select the right candidates, because this can have an impact on the success of the franchise. To find the rare pearl, you should not hesitate to multiply the recruitments. The next step is to formalize the franchise with a contract. It is important to include all the conditions related to the collaboration in this contract: the operating mode, the payment, etc. The various obligations and rights of the franchise, which are incumbent on each party, as well as the method of resolving conflicts, should not be forgotten. Last but not least is the training of the franchisee. This can last a few weeks, a few months, and can even continue over time to reinforce the franchisee's capacity.