Franchise def. In the exciting world of franchising, the franchisor shares his distinctive know-how and commercial brand with ambitious entrepreneurs.
Explore this unique opportunity to benefit from proven expertise and an established business identity.
What does franchising mean?
The close collaboration between two distinct entities, the franchisor and the franchisee, characterizes the franchising system, a model for commercializing products, services or technologies.
In exchange for a financial contribution, franchisees acquire the right to use the franchisor’s name, trademark and know-how, while benefiting from technical and commercial assistance.
The franchisor retains ownership of the brand, and receives remuneration from the franchisee in the form of an entry fee, royalties or product margins.
The choice of franchise type depends on affinity, but some business sectors require mandatory professional qualifications.
A thorough study of the market and factors such as brand growth, product age and geographical location is also essential.
The three pillars of franchising
The franchise model is based on three essential pillars:
- the franchisee licenses the brand,
- the franchisor passes on his know-how to the franchisee,
- the latter benefits from the assistance and training provided by the franchisor.
The brand
To guarantee the franchisee’s recognition, the franchisor must provide his distinctive signs, such as his name, trademark, signage and everything else that represents him.
A license or sub-license of the signs in question is essential, allowing temporary use of these attributes without transfer of ownership.
In the event of breach or termination of contract, the franchisee loses use of the signs.
The brand’s reputation encourages customer traffic, lends credibility to the search for financing and commercial premises, and offers advantages with the franchisor’s national partners.
Know-how
According to the European Franchising Code of Ethics, know-how encompasses practical, non-patented information derived from the franchisor’s experience and tested by him.
It must be secret, substantial and identified.
In franchising, the franchisor must pass on tried-and-tested business know-how, generating higher revenues than independent operators in the same sector.
This expertise must evolve through innovations tested in pilot units.
Support and training
Know-how is passed on through training and assistance.
The franchise contract commits the franchisor to providing initial training and ongoing assistance throughout the term of the contract.
This includes start-up support, a hotline, regular visits and access to a central purchasing unit.
It is important to note that not all know-how can be integrated into the initial training.
The operating manual provided enables the franchisee to supplement his or her knowledge once the business has been launched.
How franchising works: Understanding the franchise concept
Basically, franchise holders pay franchisors to operate a concept and obtain commercial assistance.
Despite this, franchisees retain their independence, and a franchise agreement must preserve this freedom of action.
Franchising is a structured network of independent entrepreneurs operating under the banner of a brand and a commercial network head.
This structure is crucial:
For the franchisor, ensuring relatively uniform use of the concept throughout the country;
For the franchisee, avoiding isolation and encouraging exchange with other network members, to share best practices or resolve doubts.
With this in mind, franchisors are setting up, on a certain scale, sales promotion programs for their franchise network:
- Team of managers to supervise and assist franchisees in their activities
- Regular meetings between franchisees and the network head, as well as between the franchisees themselves;
- Use of communication tools such as intranets and professional social networks, reinforcing the network’s commercial dimension
What are the advantages of franchising for the franchisee?
There are many advantages to becoming a franchise associate.
The franchisor passes on his mastery and expertise, giving you a real competitive edge.
This includes management of the sales outlet, product manufacturing and customer service.
Joining an existing brand confers instant notoriety, accelerating the start-up of commercial activity.
The beneficiary retains legal and financial freedom, as he or she can own and sell the business.
What are the advantages of franchising for the franchisor?
Opting for franchisor status offers a number of advantages and helps achieve several objectives.
It facilitates territorial deployment and market share growth.
Visibility and brand awareness increase rapidly.
What’s more, it enables the franchisor to minimize investments while extending the concept.
