Module 5 – Understanding the Franchisor and Franchisee Relationship at Start Up
In this module we briefly look to develop your understanding of what you can expect to receive from the franchisor at start up and what is expected of you as a potential franchisee.
Figure 1 below illustrates an overview of how this relationship looks at Start up, below is a little more detail of what you can expect a good franchisor to give you:
- Licence to use the Know How – you will be buying the rights to the business model, a proven, duplicable, protected and profitable system that works for others who have already taken the same steps as you.
- Start Up materials and Equipment – This can fluctuate from franchise to franchise and is usually dependant on the cost of the start up equipment. Some franchise opportunities will support you in setting up a lease for large capital equipment such as a van or trailer where needed whilst others may include the whole kit in the franchise fee.
- Initial Training – this is dependent on the complexity of each franchise and can range from as little as 2 days training and be as long as 12 weeks. Typically most franchise opportunities provide 1 / 2 weeks training for going into a new business sector with onsite access to support in your territory thereafter. Tip: Check where the training is as you may need to budget for travel and accommodation.
- Marketing Launch – Most good franchise opportunities come with a form of marketing launch. The level of this is dependant on your franchise opportunity and how complex this is. Some franchise models such as Motivation & Co will support you in getting your business upto speed within in 3 to 6 months whilst others will give you the materials and train you how to implement an effective marketing strategy. Tip: Whichever it is be prepared to be the salesperson for your franchise in your territory. Remember this is a blueprint for success with a whole host of support – it’s NOT a job and the franchisor will not do all of the work for you.
A franchisor will expect you the franchisee to:
- Pay the initial franchise fee for the rights to use the licence in your chosen territory. The initial franchise fee is usually comprised of two parts – 1) the value of the licence and 2) the initial start up costs. Please remember that the initial franchise fee does not usually include the working capital that you or your business will need to survive initially or until your business has enough customers to pay your way.
- Expect you to commit to the standards and uphold the good quality of the product and or service delivered
Look forward to Module 6 – What ongoing support can a franchisee expect from a good franchisor.
If you would like to discuss any elements of this module further then do email firstname.lastname@example.org or call 01614081313 to book a FREE no obligation consultation.
 Working capital and how to calculate this will be discussed in more detail in the later financial modules.