Now that you have started to seriously consider franchising as the way to secure your future, here is some valuable advice to help you understand the wonderful world of franchising.
What is a franchise?
A franchise is a legally binding contract/agreement which
permits an independent business owner (known as the franchisee) to carry out a
business, trade or service under the identity/trading name, trade mark, using
the proven business/trading or service system of owner of the business (known
as the franchisor) in return for an amount of money (the franchise fee).
In most franchises, the franchisee also has to pay ongoing royalties, and/or support fees, and/or the cost of purchasing the licensed products from the franchisor. The legal obligations and responsibilities of the franchisee will be detailed in the franchise agreement.
The franchisor, in return, provides a complete turnkey business package/system which makes the franchisee capable to operate the business. After training each franchisee will usually have a specified and exclusive area to operate within. Continued training (when necessary), head office and on-site support and assistance to the franchisee provided by the franchisor is paid for by the ongoing franchise fee which can be a percentage of the franchisee's monthly turnover, or a fixed monthly amount.
BFA (The British
Franchise Association)
Established in 1977, The British Franchise Association is
the voluntary self-regulating governing body for franchising. All members have chosen to be vetted against a strict code of business practice:
they endeavour to be good franchisors that can deliver the success that you
want. Membership of the BFA, at any level, does not provide any warranty as to
the likelihood of achievement of commercial success by any franchisee. As with
any business venture you must thoroughly investigate every franchise proposal
before committing yourself.
Franchise agreement
This incorporates the legally binding contract and
commercial franchise agreement between the franchisor and their franchisees
which permits the franchisee under their name/identity. The contract/franchise
agreement also tells the franchisee how they must run their franchised business
and lays out the obligations of each party.
The contract/franchise agreement also covers things like what the franchisee is expected to do when they come to a point where they are selling their franchise on due to retirement etc.
Franchise prospectus
This is usually comprised of a document or brochure which
provides a fairly detailed overview of the franchisor's business proposition.
Franchise territory
Franchises will normally have a pre-defined and exclusive trading
area, meaning that that no other franchisee of your particular franchisor can
trade in the same territory, it also stops you from trading anywhere other than
within your defined franchise area.
Intellectual property
rights
This refers to your franchisor's secrets/methods of carrying
out their business; it also applies to their trade marks, brand, etc which
should are legally protected before being sold to a franchisee.
Job franchise
This is a franchise where the franchisee is a "hands-on
owner-operator" (like a ‘man-in-a-van' operation) rather than a manager of the
business.
Management franchise
This is a franchise where the franchisee manages the
franchised operation and co-ordinates employed workers who do the work while he
focuses on business-building (like a courier/delivery depot, sales operation or
a recruitment franchise).
Master franchise
This is a franchise where the franchisee is either the owner
of a foreign franchise within the UK (effectively the franchisor in
this country but operating as a master franchisee of the original business
owner) known as the ‘master franchise'. A master franchise can also apply
because you are the owner of a large territory, region or city along with other
master franchisees.
Pilot franchise
Some times the main franchisor will use their own experience
to form the basis of the pilot (or first) franchise operation in order to form
their franchise package to calculate the profit and loss projections and
training programme; it is better, however if a franchisor uses a ‘proper'
independent pilot franchise operative to test the franchise, as this will
include (‘real life) actual financial, organisation and logistics pressures as
they have been faced by a ‘pilot' franchisee.
How our area of
business has developed recently:
Mike Hanrahan has taken Maid2Clean from its launch in 1993
to a company that can now boast a network of 82 franchisees and expansion into Canada
in 2007.
Today our cleaning services are in more demand than ever; the pace of life is faster as more and more couples are having to go out to work (or work longer hours) to support the lifestyles they want. Many couples do not have the time or inclination to clean and iron when they come home from work, preferring to spend time with their families instead. This is where Maid2Clean comes into the picture to solve the problem.
Maid2Clean has been providing high quality domestic housekeeping, cleaning and ironing services to thousands of private residential householders for 15 years
Mike Hanrahan is managing director of Maid2Clean. For more information visit www.maid2clean-franchise.co.uk
