Franchise System
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The document provides an overview of franchising, including what a franchise is, examples of franchises, factors for success or failure, and revenue streams. It discusses that a franchise involves a franchisor granting a license to a franchisee to use their business model and brand name. Successful franchises view it as a long-term partnership, provide comprehensive training, undertake research and development, and tie franchisor income to franchisee success. Now may be a good time to franchise as people seek new opportunities and franchises generally have higher success rates than independent businesses.
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Franchise System
- 2. AGENDA Agenda Introduction What is it ? Examples Top Rated Franchise Sucess Rate Industry overview Suitability • • • • • • • • Revenue Streams ROI Types COMMON FACTORS Is it a Good Time? Summary Questions & Answers THANK YOU!
- 4. INTRODUCTION o A franchise is a license granted by a business to another business to make and sell goods/services. o A franchisor is the owner of the business who grants the license. o A franchisee is the person who purchases the business name.
- 5. WHAT IS IT Normally referred to as “Business Format Franchising” A contractual long-term relationship Grant of a licence to franchisee Franchisee gets: Tried and tested product/service Profitable proven business model to follow Experience and know-how of the franchisor Entitlement to use the trade name / mark Entire package
- 6. EXAMPLES
- 7. EXAMPLES
- 8. TOP Rated Franchise ( 2009 )
- 10. Industry Overview At the end of 2007 in the UK: Industry worth £12.4bn 806 franchise systems Property services Personal services Business and commercial services Hotels and catering Store retailing Transport and vehicle services 202 159 156 115 101 73
- 11. Industry Overview Regional Distribution of Franchised Units (%), 2005 – 2007 South East South West London North West East Midlands Scotland Yorkshire West Midlands North/North East Wales East Anglia Northern Ireland 20 13 12 10 8 8 8 7 5 5 3 1
- 12. SUITABLE? 1. Is it a financially viable business? - Would it still be viable with an additional 15% costs? 1. Is there long-term and widespread demand for your product / service? 2. Can you prove that it can work in other parts of the country and without your skills and ability? 3. Are the business processes easily replicable? 4. Can an unskilled person easily be trained to run the business / sell the product or service?
- 13. NOT SUITABLE YET! A business that is failing Low gross margins Where product range has short life-cycle (e.g. Tower of London gift shop) High technical skill levels required (e.g. toy) Geographically defined market - no potential to repeat in other places (e.g. newspaper delivery) (e.g. brain surgery) Not proven (e.g. only been trading for 3 months old)
- 14. TYPES Investment Franchise Investment franchises are operated by the fast-food and restaurant chains, as well as by some well-known hotels. The franchisee has overall control of the business Employs his or her own senior management and staff. Executive Franchise Involves the provision of professional services, Financial advice, legal services or recruitment assistance.
- 15. TYPES Retail Franchise The franchisee runs the outlet, employs staff and displays goods approved by the franchisor. Distribution Franchise A distribution franchise permits the franchisee to operate from a depot or central office that is usually owned by the franchisor. Depot Franchise The franchisee is the operator and sole occupant of the depot. This type of franchise is generally available to courier companies and parts suppliers, for whom a depot is an essential part of the business.
- 16. TYPES Job Franchise Usually a one-person business, operated by the franchisee from home. Home-delivery operations, such as lawn care, car repairs or furniture refurbishing, are examples of job franchises. Management Franchise A management franchise is where the franchisee will be responsible for both running the franchise and employing and managing a team of operatives.
- 17. REVENUE STREAMS Initial Franchise Fee Average cost is £52,500 On-going Fees Management Services Fee (Royalty) National Marketing Levy Average 7.5% of Gross turnover (never profit) Average 1.9% of Gross turnover Mark-up on Goods Service Fees Training Fee Others: e.g. re-sales (transfer fees) The franchisor should not be looking to make a profit from the initial fee. Source: (Nat West Survey 2008)
- 18. R.O.I
- 19. COMMON FACTORS Successful Franchises View franchising as a long term partnership Provide comprehensive training Undertake ongoing research & development Franchisors income linked to the success of the franchisees
- 20. COMMON FACTORS Failed Franchises View franchising as an income stream to prop up a failing business The business is not proven The business has limited longevity After initial training, they leave the franchisee on their own Have little or no financial incentive in the success of their franchisees Do not undertake ongoing research & development
- 21. IS NOW A GOOD TIME? People being made redundant, have a pay off and its difficult to find new jobs Businesses have less money to expand using company owned expansion The success rates are higher for both franchisors and franchisees than for non franchise businesses For Franchising to succeed still need to apply proper / sound business practices
- 22. IS NOW A GOOD TIME? Your Local Business with National Backing 45% of People would prefer to buy from a franchise business Source: bfa Franchise Awareness Survey 2006
- 23. SUMMARY A well established industry Create a national or international brand Cost Effectively Quickly A number of elements to developing a ‘successful’ franchise Sources of Help and Advice
- 27. For More Help ContactROHIT VARSHNEY +91-9911158061
Editor's Notes
- Z:Business Options FranchisingMaster Franchise DocumentsBusiness Options – Business Expansion Seminar – Example Presentation.ppt
- NEXT SLIDE: Before start want to set some parameters for my presentation
- Specialist business expansion consultancy Help companies to expand using a range of expansion models tailored to meet the individual needs of both the business and the owners The Business Options accreditations enable us to provide advice on a wide range of expansion models not just franchising. When considering expansion options we approach it from developing the best model for the business and then seeing whether there is a label that can describe the model rather than choosing the model and shoe horning the business to fit the model I will talk about franchising in its general terms today however strongly believe that if a hybrid of franchising is right for your business then that should be the model that is adopted. NEXT SLIDE: Look at what is meant by the term franchising
- Specialist business expansion consultancy Help companies to expand using a range of expansion models tailored to meet the individual needs of both the business and the owners The Business Options accreditations enable us to provide advice on a wide range of expansion models not just franchising. When considering expansion options we approach it from developing the best model for the business and then seeing whether there is a label that can describe the model rather than choosing the model and shoe horning the business to fit the model I will talk about franchising in its general terms today however strongly believe that if a hybrid of franchising is right for your business then that should be the model that is adopted. NEXT SLIDE: Look at what is meant by the term franchising
- NEXT SLIDE: Look at some examples of well known and lesser known franchises
- NEXT SLIDE: Look at some lesser known franchises
- NEXT SLIDE: Look at some statistics about the franchising industry
- NEXT SLIDE: Look at what dictates if a business is franchiseable or not
- NEXT SLIDE: Look at what dictates if a business is franchiseable or not
- NEXT SLIDE: Look at what factors dictate if a business can not be franchised
- NEXT SLIDE: Look at different type of franchise models
- NEXT SLIDE: Look at the revenue streams for a business that franchises
- NEXT SLIDE: Look at the revenue streams for a business that franchises
- NEXT SLIDE: Look at the revenue streams for a business that franchises
- NEXT SLIDE: Look at the stages involved with franchising a business
- NEXT SLIDE: Look at some other expansion models
- NEXT SLIDE: Overview of Licensing – Pros and Cons
- NEXT SLIDE: Overview of Licensing – Pros and Cons
- Have copies of presentation at the back Copies of some information on business Options and range of services we provideCALL TO ACTION If you are looking to expand yourself or have clients who are looking or right for expansion we offer free initial meetings. Where we are introduced to potential clients from professional bodies we don’t look to take over the client rather they stay your client and we work with you.