To achieve success as a self-employed individual, it is essential to have a great business concept and a well-developed plan. If you decide to franchise, you no longer have to take this hurdle. You adopt a ready-made and proven business model.
Franchise – Proven Know-How For Start-Ups
The principle is simple: a company established in the market (the franchisor) grants several partners (the franchisees) the right to conduct business with its products or services under its name.
Best Starting Conditions
A big plus for the franchisee: He doesn’t start from scratch. Because he adopts a business model that has been successfully tested in practice. And he implements this independently at his location. In contrast to many other entrepreneurs, the franchisee is not a lone fighter but receives active support from the franchisor. I encourage you to read more about this blog here: Do You Want To Have Your Own Business? Invest In These 3 Things
The Main Advantages For The Franchisee:
- Adoption of a proven business concept
- The brand is established
- Competent support from the franchisor
- Market entry is fast
- The marketing is professional
- The shop is fully stocked
Franchise Association: Partnership With Mutual Benefit
The Franchise Association (DFV) defines a franchise as “a partnership-based distribution system with the aim of sales promotion”. Both sides benefit from this. In return for the rights granted, the franchisor receives franchise fees from the franchisee. Usually, these are one-time entry costs and regular payments that depend on sales.
The franchisee undertakes to offer their products or services in a regional market. He is part of a network. Nevertheless, he remains a legally independent and independently working entrepreneur. And thus also bears the economic risks.
How To Become A Franchisee
Found an interesting concept? Then apply! Good franchisors have a multi-stage selection process. Both sides can carefully consider the decision to enter into a partnership.
What To Look Out For
Check the information material before starting your cooperation. Does it look professional? is it complete Please note that brochures may be embellished.
Recognize “Black Sheep”
Take a close look at the franchisor: Has he been in business for a long time? Can he provide you with a roadmap for starting your own business? Find out how extensive his support will be. A good franchisor will give you all the important information about the product and the choice of location. He will support you in setting up the company and with marketing. And he prepares you for your entrepreneurship through training courses. You will usually also receive a manual for operational management.
Franchise Fees
A successful concept does not come for free. Most franchisors charge an entry fee for their expertise, site surveys, establishment, and other services. In addition, there are ongoing fees for regular training, advice, system services, advertising campaigns, and market analyses. There are no uniform guidelines or values for this.
Turnkey – And Good?
Check meticulously the economic basis of the planned company. When will you be in the black? Can you make ends meet? Be sure to include all of the company’s costs.
Contact other franchisees in the system before signing the contract. This is the best way to find out how business is going and to check statements from the franchisor. Many franchisors offer such contacts themselves.
Franchise System: A Seal Of Quality Provides Orientation
The Franchise Association has introduced a system check. This puts the contract, manual, concept, products, services, strategy, and management of the franchise system to the test. If a company passes the check, it can display the DFV certificate for three years and is on the “positive list”.
Your Sparkasse Supports You – Also Financially
You want to become self-employed as a franchisee. We are on hand with help and advice. We advise you comprehensively in the run-up to founding, support you with financing, and look after your company professionally in all other financial matters.
What We Offer Franchisees:
- We assess the franchise system professionally
- We check the franchise agreement
- We assess your business concept
- We will advise you on the choice of location
- We offer you tailor-made financing
- We handle all of your payment transactions
- We support you with the company and private pension schemes
The savings banks have extensive practical experience in looking after franchisees. And we have all the important basic data about franchises at hand.
The savings banks’ innovative franchise information system provides compact information on many franchise systems. So we can quickly take care of your project. The system also offers attorney opinions for franchise agreements, which provide additional security for the franchisee.
Frequently Asked Questions About Franchises
What Opportunities For Self-Employment Dose A Franchise Offer Me?
Many. There are now around 1,000 different franchise systems. Numerous sectors are covered: retail, system gastronomy, trade, and the large area of services. Franchisees are often start-ups. Existing entrepreneurs are also increasingly joining a franchise network and thus converting or expanding their businesses.
What Do I Have To Pay Attention To When Concluding The Contract?
Signing the franchise agreement requires that all parties involved have checked each other intensively beforehand. For example, checklists for franchise founders – such as those of the German Franchise Association – are informative. The Chambers of Commerce and Industry, lawyers specializing in franchising, and your savings bank can also help.
As part of their duty to provide information, franchisors must disclose all essential information. With good systems, the founder goes through a structured and multi-stage process. Signing the contract is the official conclusion of a thorough review process. And the beginning of a close partnership, the primary goal of which is economic success based on satisfied end customers.
Am I Covered By The Franchise Concept?
Even if you join a franchise system as a franchisee, you bear the entrepreneurial risk of your business.
The support of the franchisor is a good basis for a sustainably successful start-up. Professional franchise systems also have an “emergency plan” for business network partners. One franchise partner stands in for the other if the latter is absent due to illness.
What Rights And Obligations Do I Have As A Franchise Partner?
The rights and obligations of the franchisee should be clearly defined in the contract. This also includes agreements on the education and training of the franchisee, on advertising, and on keeping the company’s brand “pure”. The franchisee also receives the franchise manual. The specified processes should be laid down there.
Why Do Franchisors Charge Entry Fees And How High Can They Be?
Depending on the concept, the entry fees are usually between 5,000 and 25,000 euros. The fees for young systems are usually in the lower range. For this purpose, the franchisor provides the franchisee with a complete package: knowledge, help, and services. This includes the established brand, the marketing and sales concept, extensive training, controlling, and the franchise manual. In addition, there are location analyses, taking over the establishment of the company, and, last but not least, support with the market launch.
What Are The Ongoing Fees For Franchisees?
The ongoing fees should be in the range of 1 to 15 percent of the net turnover. They depend on the services that the franchisor offers the franchisee. The ongoing fee serves to amortize the advance payments made by the franchisor. It is incurred, among other things, for the use of know-how, training, brand protection, advertising material, advice, and for the further development of the system. Incidentally, this also depends crucially on the intensive exchange between the franchisor and the franchisee.
Learn More About Franchise: Success With A System Successfully From businessjohn
