Understand the franchise model

The franchise It is a commercial model that has gained popularity over the years, offering a unique opportunity for both entrepreneurs and affirmed companies.

In this article, we will thoroughly explore what is the franchising, its operation, its different forms, as well as the advantages and disadvantages it presents.

What is franchising?

The franchise is a commercial agreement in which a company, called Franchisor, allows another company, the franchisee, to use its name, its brands, its commercial methods and its know-how in exchange for commissions or costs.

This model allows affiliates to benefit from an already consolidated brand and an operating system proven, while it manages its business.

Franchising is particularly widespread in various sectors such as catering, retail, services and even some sectors such as education or health.

Different types of franchise

There are different types of franchises, each with its peculiarities:

1. Distribution franchise

This type of franchise allows the franchisee to sell products with the franchisor brand.

This often includes retail companies, such as clothing or food chains.

2. Service franchise

In this model, the franchisee offers services under the sign of the franchisor.

This may include cleaning companies, travel agencies or even home care services.

3. Industrial franchise

This model allows the franchisee to produce and sell products with the franchisor brand.

It is common in sectors such as food or production of goods.

4. Conversion franchise

In this case, independent companies adopt the franchise model of a consolidated brand.

This allows existing companies to benefit from the support and recognition of the brand while maintaining a certain independence.

How does the franchising model work?

The franchising model is based on a symbiotic relationship between the franchisor and the franchisee.

Here are the main phases of this operation:

1. Franchise : The franchisor and the franchisee sign a contract that defines the rights and obligations of each party. This contract includes aspects such as the duration of franchise, commissions and geographical areas of operation.
2. Training : The franchisor provides initial training to the franchisee, covering all aspects of the company’s functioning, from the management of marketing operations. This training can vary in duration and intensity depending on the franchising model and the complexity of the operations.
3. Continuous support : Franchisor often offer continuous support, including operational advice, updates on products and services, as well as support for marketing. This can also include regular audits to ensure that quality standards are satisfied.
4. Operations : The franchisee manages its activity following the guidelines and standards established by the franchisor to ensure a brand consistency. This often involves the use of specific management and software systems provided by the franchisor.

Advantages of franchise

1. Reduced risk

THE Franchise model It has a lower risk than the creation of an independent company.

The franchisee rely on a consolidated brand and a proven commercial model, which reduces the uncertainty linked to the implementation of a new company.

2. Access to a established market

The affiliates benefit from the recognition of the brand and an already faithful clientele, which facilitates entry into the market.

This can involve a higher turnover from the beginning than an independent company.

3. Training and support

The training provided by the franchisor allows affiliates to quickly familiarize themselves with the functioning of the company, thus increasing their chances of success.

In addition, marketing and operational support continue to guarantee optimal performance.

4. Network effect

Franchisee can take advantage of the network effect of a well -established brand, which allows them to access resources and markets that they could not have achieved alone.

Disadvantages of the franchise

1. Initial costs

Franchising costs can be increased, including continuous commissions and start -up costs.

These costs can sometimes be an obstacle for new entrepreneurs, especially in the sectors where competition is strong.