Definition of the franchise
First of all, we need to define what franchising is. It is a mode of commercial deployment involving, on the one hand, a company called the “franchisor” and, on the other hand, one or more other creators of a business, the “franchisees“. Also, a franchise agreement specifies the legal and financial independence of franchisees and franchisors.
Within the framework of the franchise agreement, the franchisor undertakes in particular to:
- – Grant the use of its concept (brand and methods)
- – Supporting franchisees in the implementation of this concept
- – Take charge of marketing and communication actions
In return for using the franchisor’s methods and notoriety, the franchisees undertake to respect the rules of the network, and to pay an entry fee, royalties on sales, a contribution to communication costs,…
Thus, the advantages of franchising appealed not only to trade professionals – commercial franchisors – but also to service professionals – service franchisors.
The advantages of franchising
There are many arguments in favour of franchising.
For the franchisor:
The major advantage of starting a franchise business is the strength and speed with which its concept is deployed. This fulgurance can play a strategic role in an emerging and/or fast-growing market. In addition to this network strategy, the development of franchising makes it possible to define a standard on the market and to develop a reputation.
For the franchisee:
starting a franchise business reduces the risks. By benefiting from a solid and sustainable business model that has already been proven, the entrepreneur reduces entrepreneurial and commercial risk. This entrepreneur benefits from the franchisor’s experience and guidance.
Under franchise agreements, 90% of companies are still in operation after 5 years.
What is a franchisor?
The franchisor is an entrepreneur, a company, that grants to independent third parties a right of use of:
- – its brand
- – its sign
- – its know-how
The franchisor has already tested its concept in pilot units and wishes to develop a franchise network.
Among the franchisor’s prerogatives are
- – maintaining consistency and strengthening the concept: taking charge of business strategy, developing and strengthening the brand image, defining the quality standards to be met.
- – enhanced support and assistance: the provision of its commercial, logistical and technical know-how, training of franchisees, during the setting up of the project and throughout the life of the company.
- – procurement: the supply of raw materials, equipment, products, technologies… necessary for the activity.
Some examples of franchisors:
- – Commercial franchises: McDonald’s, Starbucks, Yves Rocher, Palais des Thés, Bureau Vallée,…
- – Service franchises: Laforêt Immobilier, Orpi, Ad senior, 02 care services, Happy Moov,…
What is a franchisee?
The franchisee is an independent entrepreneur who has chosen to become a franchisee based on the commercial identity, experience and know-how of a franchisor. It benefits from the franchisor’s technical, commercial and logistical assistance. To enter a franchise network, it undertakes to comply with precise specifications (quality, process, management, etc.) and to pay an entry fee and franchise fees.
Evolution of the franchise
The advantages of franchising are reflected in its dynamics. So much so that the French franchise is the European leader, with steady growth. A study by the French Franchise Federation tells us that over the last 10 years, the number of franchisors and franchisees has almost doubled. 55.1 billion in 2016 and almost 700,000 jobs.
This dynamic trend can be seen as much in the number of creations as in the number of franchising outlets. Despite this innovation in concepts, the historical sectors of personal equipment, hotels, restaurants and hairdressing, know how to reinvent themselves and remain dynamic.
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