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.
2. AGENDA
Agenda
Introduction
What is it ?
Examples
Top Rated Franchise
Sucess Rate
Industry overview
Suitability
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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
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)
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
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.