Visitor FAQ’s  Event FAQ’s  

Potential franchisors and visitors curious about the concept of franchising can view a few frequently asked questions on franchising and familiarise yourself with this unique business opportunity.

  01) What is a franchise?
02) What are the advantages of franchising?
03) Who is a franchisor and who is a franchisee?
04) How to choose a franchise?
05) Who is in control?
06) Cost of a franchise?
07) Do I need relevant experience of the sector?
08) Do I need prior business experience?
09) What are the types of business franchises?
10) What is the growth potential of a franchise?
11) Is my franchise legally protected?


What is a franchise?
It is a privilege, right or authorisation granted to someone to sell or distribute a company's goods or services in a certain area. Any business or group of businesses established or operated under such authorisation or a brand name under which a series of products is released is termed a franchise.

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What are the advantages of franchising?
* A proven business concept
* A tried and tested market
* An established trade name
* Access to an experienced network
* Training in business skills and sales
* Market intelligence from the franchisor
* Marketing activities undertaken by the franchisor
* Bulk buying powers of the franchisor
* Finance may be more readily available
* Lead-time to success may be smaller

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Who is a franchisor and who is a franchisee?
The owner of a business is the ‘FRANCHISOR’. The franchisor has the power to grant a license to a local operator the ‘FRANCHISEE’ to use the franchisor’s name, product, service and associated goodwill for a specific period of time. The franchisor in turn supplies a complete, proven concept together with their own unique 'know-how' thereby removing uncertainities in setting up a new business.

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How to choose a franchise?
Consider the viability of your potential franchise brand, product/service - How viable is your potential franchise? Will it be easy to market or sell in your specific region?
Can the company provide evidence of a sound business with proof of at least one successful franchised outlet and no significant record of failures?
Cross Examine Yourself - How much time and financial commitment can you give? What are your expectations? Have you spoken to other franchisees to hear their experiences?

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Who is in control?
Each business outlet is owned and operated by the franchisee and is the franchisee's very own business. However, the franchisor retains control over the way in which the products and services are marketed and sold. To make a franchise successful there needs to be a solid partnership, combing the franchisee’s talents with the franchisor’s experience and knowledge.

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Cost of a franchise?
The franchisor will receive an initial fee from the franchisee, payable at the outset, together with on-going management service fees for the franchise license - usually based on a percentage of annual turnover or mark-ups on supplies. In return, the franchisor has an obligation to support the franchise network, notably with training, product development, advertising and promotional activities.

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Do I need relevant experience of the sector?
No prior experience is required as most franchisors provide franchisee training, as is the commitment within the franchise industry. Comprehensive training opens up the availability of a franchise opportunity to a much wider population of potential franchisees, enabling the franchisor to select the best candidates in terms of commitment, drive and enthusiasm for the business rather than searching for relevant experience.

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Do I need prior business experience?
For individuals with no previous business experience, many franchisors recognise the need to assist new franchisees in getting their business off the ground. This support is funded by the ongoing management service fee paid by franchisees. Support will cover putting the business plan together, site selection and telephone support. Dedicated IT and operational support is usually offered for franchisees in more complicated sectors, while technical advice is essential for specialist areas. As franchisees gain more experience they will require less constant advice and guidance from the franchisor, leading many franchisors to promise an intensive initial support system followed up by a more general programme for the more experienced network.

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What are the types of business franchises?
The types of franchises can be divided into categories: Job Franchises, where the franchisee operates the business hands-on; Sales & Distribution Franchises, where the franchisee is on the road, selling and/or distributing products in his territory; Executive Franchises, where the franchisee runs a one-man, white-collar business; Retail Franchises, where the franchisee invests in commercial property, staff and inventory to help operate a shop-unit; Investment Franchises, where the franchisee puts up the capital and appoints a manager to run the business; and Management Franchises, where the franchisee manages a team of operatives.

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What is the growth potential of a franchise?
Franchising offers the franchisor a route to national expansion that is usually much speedier than company-owned growth, because a franchisor will not need to build up huge staff and premises costs - rather the franchisor's capital can be committed to developing a small central organisation with a few highly skilled staff. By speeding up expansion through franchising, a network of franchisees achieves higher economies of scale earlier, stronger brand awareness, is much sooner able to challenge for national contracts and, in the case of a fledgling market, is in a much better position to capture early market leadership and establish a dominant position over its non-franchising competitors.

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Is my franchise legally protected?
All franchisees sign a franchise agreement with the franchisor in order to secure their franchise, the main function of which is to clearly set out the extent of the rights to be granted, the territory in which those rights apply, the exclusivity of the rights in the territory and the term in which the rights exist. A typical agreement will outline the franchisee's exclusive rights to market, build a business under, profit from and possibly sell sub-franchises under the brand within the territory for a reasonable term. There are a number of specialist franchise lawyers familiar with the nature of the franchising relationship and will be able to judge a franchise contract that not only protects your business, but also keeps in mind commercial considerations.

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