Becoming a franchisor

Becoming a franchisor means managing to expand, transferring to others the burden of specific investments, be more competitive in order to easily reach economies of scale and absolute cost, share risks, problems and opportunities with partners. The entrance to an affiliation activity allows:

 

  • A rapid conquest of further market shares;
  • The achievement of greater bargaining power in purchasing with consequent positive effects on finance;
  • the market occupation at the expense of competitors with its affiliates;
  • a greater and more rapid brand valorization with consequent customers fidelization, thanks to advertisement;
  • optimization of the production and distribution planning in relation to the needs of the network;
  • access to adequate and privileged financial resources inherent in a commercial network.


Main steps to become franchisor

Having a business idea, that of a “product”, be it a good, or a service or a goods/services mix with characteristics of originality and differentiation. After having examinated competitors, prepare a thorough market survey on the sales potentiality of your business idea. Once packed and prepared the “package”, it must be accompanied by two fundamental elements: the Operational Manual and the Affiliation Contract.


The contract

The commercial affiliation contract must be written under penalty of nullity.

For the establishment of a franchise network the franchisor must have experienced on the market its commercial formula. If the contract is fixed term, the franchisor will have to guarantee the franchisee a minimum duration sufficient for the investment’s amortization and of not less than three years. Not prejudice the possibility of advance cancellation for default by either party. The contract should also specifically indicate:

• The amount of investments and of any entry cost that the franchisee has to pay before the start of the activity;
• The methods of calculation and royalties payment and any indication of minimum takings to be achieved by the franchisee;
• The field of any territorial exclusivity both in relation to other franchisees and in relation to channels and sales units directly managed by the franchisor;
• The specific know-how provided by the franchisor to the franchisee;
• Detailed rules for the recognition of know-how contribution by the franchisee;
• The characteristics of the services offered by the franchisor in terms of technical and commercial assistance, planning, development and training;
• The conditions for renewal, termination or possible relinquishment of the contract

 
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