When you sign up to a franchise you will be expected to pay a regular fee to the franchisor – so what can you expect to get in return for this?
The exact support you will receive will differ from place to place – some larger franchises may have entire departments set up to provide you with extensive training and perhaps even a 24/7 phone number to call, while others might harness the experience of another franchisee to act as your mentor.
There is no right way to support your franchise, but it is important that you look at what type of information and advice you will receive for the amount of cash you hand over and how this compares to the support you need for the business in question. A crucial point is that you get value for money, not just choose a franchise with the lowest regular payment.
What you pay
With this focus on value in mind, you can review how much a regular payment for a prospective franchise would be; usually you will pay a management fee and in many cases there will be an advertising fee – you contribute to regional or national promotions run by the franchise. This figure can be a percentage of the franchise’s overall turnover, but often the franchisor will ask for a fixed amount or perhaps a percentage of your profits.
The amount you pay will have a real impact on your business and you need to think about how different charging structures will affect what you take home. For example, a fixed fee may be cumbersome if you are not confident about your ability to generate turnover, but could be preferable if you believe you can over-deliver sales-wise.
Of course, the whole point of your management fee is to help your business succeed, so the amount you pay should be proportionate to the support you receive – a higher fee might mean you get the advice you need to get ahead.
What you should expect in return
In basic terms, you should expect a structured support system that allows you access to all the information and experience that you need to keep your business going. Some people might choose not to use all the guidance available – often illogically – but the important thing is that it is there if you want it.
The support on offer should include both administrative and technical advice; activities such as recruitment, bookkeeping, lease negotiating, marketing planning, store decoration and supplier contracts can all be crucial parts of running a successful operation. A good franchise will ensure that you know what you are doing in these areas before you launch and be there to answer questions once you are open for business.
Generally speaking, you will receive training – anything from a couple of days to a number of weeks – either at head office or another store at the start; however, your backing does not stop there. There should always be a medium of communication open to you in case you run into difficulties – either through a network of fellow franchisees or direct contact with the franchisor.
Additionally, if you regularly pay an advertising fee, you should expect to receive sufficient promotional materials over the course of a year to keep the space looking fresh – consult with fellow franchisees about timescales if you are unsure.
The importance of ongoing support
Even though you will receive an operations manual as part of your initial training, chances are there will be all sorts of questions that will come to you as you start out with your new business, which is where an effective support system comes into its own. For this reason, the level of ongoing support can be a dealbreaker when people are deciding on which franchise to opt for.
If you are unsure of what your franchise arrangement entails, check the legal document you are being asked to sign and speak directly with the franchisor – it is not something you want to be left vague as it is such a pivotal factor. Everyone wants their business to succeed and having expert help at hand is surely a useful crutch for those just starting out.