Franchising is the ideal choice for entrepreneurs who wish to rapidly expand their market presence while limiting financial risk. In this article, we will explore the various steps involved in setting up a franchise in Italy: from writing the business plan to monitoring franchisees.
What is franchising?
Franchising is a business model in which one company (called the “franchisor”) grants other companies (called “franchisees”) the right to use its trade name, trademark, products and know-how in exchange for compensation.
This system is increasingly being used to rapidly expand its presence in the Italian market in a quick and sustainable way. In fact, by not needing to invest in new stores, franchising reduces financial risk. In addition, by harnessing the skills and resources of local entrepreneurs, it is possible to penetrate deeper and more deeply into the local area.
How to create a franchise in Italy from scratch
To create a successful franchise in Italy, it is essential to perform careful business planning. Let us look together at the key steps in this process.
Drafting the business plan
The business plan provides a detailed roadmap for launching and operating the franchise. In fact, through the various sections in which this document is divided, one can assess whether the activity will be successful.
First of all, a thorough analysis of the Italian market must be conducted to identify opportunities and challenges specific to the target industry. In fact, based on consumer trends, existing competition, and potential growth areas, the franchisor can clearly define the type of business affiliation he or she wants to create.
Options include:
- the distribution franchise, where only business techniques are transferred to the franchisee;
- service franchising, which also involves the know-how needed to provide services;
- the production franchise, where the franchisee can produce goods using the franchisor’s specific brands, production processes or formulas and resell them according to the brand’s sales techniques.
Based on the chosen business model, the product or service offering, the target market, and the desired pricing strategy are outlined.
At this point, the franchisor can conduct a feasibility study of the business, thoroughly analyzing the financial forecast, which includes the revenue, operating costs, and investment needed to start and run the franchise.
Legal and contractual structure
Once he has ascertained the potential of the business, the franchisor can proceed to define the legal and contractual structure of his business.
In fact, to start a franchise in Italy, it is necessary to register the trademark at the UIBIM (Italian Patent and Trademark Office) or at the Chambers of Commerce.
At this point, working with legal professionals who are experienced in this area, the franchisor is responsible for drafting a clear and comprehensive contract that includes terms related to initial costs, compensation, contract duration, and dispute resolution procedures, as well as the rights and obligations of both the franchisor and franchisees.
Specifically, at this stage it is important not to confuse fees, which are the fees paid by the franchisee at the beginning of the relationship to gain access to the network, and royalties, which, on the other hand, are fees bestowed on an ongoing basis during the franchise relationship and are often dependent on turnover. Many contracts, to be more attractive to potential franchisees, either do not require royalties or trigger them from the second year of operation.
Creation of the operations manual
The operations manual is another document that cannot be missed in the process of starting a franchise in Italy.
It includes a set of detailed instructions on every aspect of the activity, such as:
- The opening and closing of the store,
- hygiene and safety regulations,
- Inventory and supply management,
- The preparation and presentation of products or services,
- Personnel and human resource management,
- The marketing and promotion of products or services,
- Customer service and complaint handling.
In other words, the operations manual provides detailed and structured guidance that assists the franchisee in running the business according to brand standards.
It serves both to maintain consistency and to preserve brand image and reputation within the franchise network.
Franchisee profiling and training
Selecting qualified and motivated franchisees is another crucial aspect of business success. Therefore, it is advisable to carefully evaluate candidates based on several considerations, including their entrepreneurial skills and financial capacity.
Candidates should demonstrate a solid understanding of the target market and business management strategies, which are essential for addressing challenges and taking advantage of opportunities in the industry.
At the same time, it is critical that franchisees are able to bear both the initial investment required to start the business and the operating costs and financing of day-to-day activities.
Once franchisees are selected, the franchisor can take care of their training on all aspects of the business, including operational processes, marketing, customer service, and financial management.
Marketing strategy
By developing a comprehensive marketing plan, you can promote your franchise in the Italian market and attract potential franchisees and customers.
Nowadays, social networks play a key role in reaching a wide audience and generating engagement. Through platforms such as Facebook, Instagram, LinkedIn, and Twitter, you can create engaging content and interact directly with potential franchisees and customers. In fact, targeted ads can be used to reach specific demographics and interests, thus increasing the likelihood of campaign success.
Parallel to online marketing, the opportunities offered by offline marketing should not be overlooked. Local advertising, through newspaper ads, flyers and posters, can be extremely effective in capturing the attention of people in the area. In addition, launch events allow for face-to-face interaction with potential stakeholders and introduce them to the brand and its offerings in a more tangible way.
Affiliate monitoring
Constantly monitoring the performance of franchise locations and gathering feedback from franchisees and customers are two necessary activities to identify areas for improvement and make any adjustments to the business model put in place.