What is Franchising?

Information about Franchising.

Franchise Buyers Checklist

Important points when considering a Franchise.

Buying A Business

Information about buying a Franchise in Spain.

Franchises Available

Find a Franchise in your area.

How to expand your business - could franchising be the route to follow?

Every business reaches a stage where its owners need to decide where to go next. In many cases, growth of your business is what you want to achieve, and franchising could be a useful avenue to explore. However, you do need to be sure it’s right for your business and that your business is right for franchising.

Franchising is the leasing of a business’s systems and know-how through a legal arrangement, allowing another individual or company (the franchisee) to use your trademarks, business systems and branding to build their own business. In return, you should receive an initial license fee, and an ongoing payment, either by way of a royalty based on a percentage of the sales the franchisee achieves, or a mark-up on the products you supply to them.

Is your business suitable to be franchised?

• How easy is it to transfer your service, expertise or know-how to someone else?

• What is the competitive edge to your business that attracts customers and will it work in different places?

• Is your business generating sufficient gross profit margin to enable you, and your franchisees, to make money?

• Do you have, or can you acquire, the ability to provide solid ongoing support to your franchisees?

• Is your business successful already? Franchising is not a quick-fix solution to rescue a struggling enterprise.

You will also need to decide what kind of person you are looking for to become your first franchisee. What skills and experience will they need and do they have sufficient funds to invest in the business? It’s not a good idea to compromise on your first franchisee as you may damage your reputation and store up problems for the future.

Examples of types of business that have been franchised successfully range from fast food outlets, courier services and employment agencies to hotels and major retailers.

What’s in it for my business?

From what you’ve read, it might sound like you are giving a lot away, but where is the return for your business?

Here are some of the benefits:

• Motivated individuals
An individual who buys a franchise will typically have made a personal investment in the venture which will drive them to maximize growth and profitability. This is something an employee is unlikely to do, no matter what incentives are on offer to them.

• Lower overheads
There are costs involved in establishing a franchise system, and providing ongoing support, but most of the capital involved in establishing the individual outlets will be provided by the franchisee. So you will incur lower overheads than running the branch network yourself.

• Building the brand
Usually you can achieve more rapid expansion through franchising than other means, subject to the availability of good-quality franchisees. Often a local franchisee will be more acceptable to the local community, which will help with the perception of your business as a national name with local roots. Franchising also means keeping control of the business without the day-to-day running of a network of branches.

• Ongoing revenue stream
over time, the ongoing royalty stream should develop to be a significant part of your revenue, or you will have increased the volume of products you sell to or through your franchised outlets, so generating additional margin for you.

• A route to international expansion
Franchising is one route that can be used to develop your business overseas. By working with a local individual or business, you can benefit from their knowledge of the marketplace. Franchising your business in the UK is not necessarily a prerequisite to franchising overseas, but could be useful.

What next?

Contact The Franchise Shop Spain business expansion team and we will give free independent professional advice setting up a franchise and the value of your business.

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