When a personal idea becomes a commercial success, the entrepreneur has several options.
They can either continue their business with a sole proprietorship, or launch branches and become a franchisor.
Creating a branded franchise is a project that requires the development of a precise concept, based essentially on market expertise, know-how and the economic and commercial skills needed to become a franchisor and turn a franchise into a lucrative business.
How do you become a franchisor and manage several points of sale?
What are the steps involved in growing the business and attracting franchisees who will contribute to national or international development?
Becoming a franchisor is an operational change, which requires first and foremost the registration of a trademark.
The key steps to becoming a franchisor
Before becoming a franchisor, the entrepreneur must ensure that he has a concept that works, with a clear operating manual that can be reproduced. This is a business development strategy not to be taken lightly. It all starts with a competitive idea, illustrating the company’s ability to grow through well-defined objectives. The business must have been in operation for several years in order to demonstrate its viability. Structuring a business and then developing a brand license will be necessary to retain the rights and become a franchisor.
To become a franchisor, duplicate and reproduce the business on the local or international market, the professional needs a pre-contractual information document (DIP). This serves as a guide – or operator’s manual – for future franchisees. It covers specific topics such as the company’s history and current identity, contract terms and financial aspects, development prospects and market presentation. It is drafted with the help of a specialized lawyer.
To become a franchisor and attract franchisees, the entrepreneur needs to put in place a solid concept and highlight his economic projections.
He must have a distinctive sign for his brand (unique, striking, easy to remember) that will enable him to be known in his target market. How? By calling on a communications company to create a visual identity that will support the business and become a recognized franchisor.
What are the franchisor’s obligations?
In addition to the obligation to register your trademark, to become a franchisor, you need to provide a DIP 20 days before signing a franchise contract or pre-contract.
Franchisees must pass on their know-how.
The parent company has a duty to provide assistance and support in order to launch the business properly.
Depending on the nature of the business, training may be provided.
The launch cannot take place unless the franchisee has fully mastered the business and its specific methods.
The transfer of information and procedures will enable the franchisee to acquire the know-how of the parent company, covering areas such as cash management, so that he or she can concentrate on development and growth opportunities.
To become a franchisor, you need to have the necessary funds to launch operations.
Assigning a budget to communication or machinery are key steps in automating services.
The investment rate to become a franchisor can reach 150,000 euros for the first two or three years.
What are the advantages of a franchise?
Why become a franchisor?
It’s a way of taking your business to a whole new level, one where you’re not competing!
Positioning yourself in several geographical areas with strong customer potential is the main reason for creating a network.
By joining forces, the two parties will attract new customers and increase the reputation of one through the other.
By being active and present in an additional region, thechain gains in popularity until it establishes itself as a key player in a sector.
This enables the company to gain a firmer foothold in a sector more quickly, thanks to a greater number of sales outlets.
With the profits it generates and its growing reputation, it increases its capacity to set up other businesses.
This strategy takes on even greater proportions when it comes to becoming an international franchisor.
The brand, or trade name, becomes much more visible and will gain in value, which will help accelerate the implementation of the concept to take market share in several countries while standing up to the competition.
How is the franchisor remunerated?
Becoming a franchisor is also a financial advantage, since franchisees will have to pay an entry fee, also known as the Initial Fixed Fee.
It’s this payment that seals the partnership agreement, which can mean an economic marriage! However, this sum can be paid in two stages: when the contract is signed, and at the end of the training course.
It symbolizes the right to use the brand name for a given period in a given geographical area.
The RIF is assessed on the basis of the business sector, the reputation and size of the network, competition and potential.
The professional’s remuneration also includes operating royalties.
In return for the advantages obtained by the franchisee – know-how and use of the trade name – the franchisee must pay a royalty on a regular basis, in the form of a percentage of sales.
Becoming a franchisor means that you can define the terms and conditions of this remuneration, including the timing of the fee, and whether it will be progressive or degressive.
The operator receives a percentage of the margins on products offered for sale, where applicable, if he chooses to become a franchisor.
In the case of a chain of clothing boutiques, for example, the retailer earns money on the margin.
This applies mainly to large distribution networks with central purchasing units.
The sums generated are often reinvested.
Certain communications operations, excluding social networks, may involve reimbursement of expenses incurred on a flat-rate basis or as a percentage of sales.
Organization is a prerequisite for becoming a franchisor.
Recruiting franchisees
How do you recruit candidates to become a franchisor? It’s important to know that the profile of candidates varies according to the size of the franchisor’s network. A well-established brand will not be looking for the same candidates as a new brand that has just become a franchisor. Franchisees will need to demonstrate certain business management skills in order to play an active role in the brand’s development on the market.
Certain criteria are directly associated with the franchise sector. The professional experience, skills and aptitudes, qualifications, age and psychology of the candidate will all be part of the assessment of the professional aspiring to become a franchisor. The selection of future franchisees remains a totally free choice. Candidates can optimize their chances by emphasizing their ability to adapt and take on new challenges within a franchise. Motivation aligned with the mission and a strategic vision for the company’s development are also significant assets.
