Mastering the Art of Building Your Own Business Franchise

Franchise Your Own Business: Fine Points of Creation

For over 20 years, franchising has been actively developing in European and American countries. However, not everyone is aware that establishing a franchise for your own business requires not only investment but also knowledge of certain nuances, which we will explain in this article.

What Is Franchising?

First and foremost, it's essential to understand that franchising is a business relationship where the brand owner and the developed business model (franchisor) grant the right to use the brand to another entrepreneur (franchisee). Thus, the franchisee acquires the right to operate a business under a well-known trademark.

Today, any organization has the right to create a franchise for its business. What is required for this?

• Investment;
• An Established Trade Mark;
• Professional Support;
• Ready Business Model;
• Success.

It's crucial to understand that only the owner of the company can sell the right to use their brand.

Another aspect to consider when creating a franchise is the success of the organization, which should be evidenced not just verbally but in reality (high income, demand for the offered product or service, prospects for further company growth).

According to professionals, successful franchise sales rely on a well-known brand. Your brand must be recognized, at the very least, in your region. If your brand lacks recognition, you may need assistance from professional PR companies or dive into branding basics to boost awareness.

Equally important is having a ready business operating scheme. Typically, franchisees are novice entrepreneurs seeking to avoid the complexities of starting a business from scratch. Hence, you must pay special attention to creating a business model that is simple and understandable, especially for newcomers to the business world. A clear model will also contribute to the rapid growth of your Trade Mark.

It's important to note that developing a business model and branding require significant investments.

If you've decided to create a franchise but don't know where to start, seek assistance from professionals who can help you in not only establishing the franchise but also in its promotion and sale.

Documentation for Franchising Creation

Any entrepreneur deciding to create a franchise must prepare all necessary documents, including:

• Exclusive Right to a Trade Mark – a symbol of product differentiation offered by a legal entity or individual entrepreneur;
• "Know-how" - insights into ways of conducting certain activities;
• Service Mark Right – a symbol of service differentiation provided;
• Right to a Commercial Designation – identification of an organization that has gained popularity due to the services or goods provided in a specific area.

The prospective franchisor must also develop an operations manual for their brand for the franchisees and a set of organizational rules.

The next step in document preparation is the creation of a commercial concession agreement. This document includes details on the franchise fee, payment terms, royalties, and advertising expenses contributions. After that, the document is registered with the patent office. Without registration, it holds no legal weight.

To avoid document-related issues and future disputes with franchisees, we recommend seeking assistance from professional lawyers in document preparation.

Responsibilities of Parties

When selling a franchise, the franchisor charges a specific amount for brand use and monthly royalties. Simultaneously, the entrepreneur selling their trademark undertakes certain obligations, including:

• Aiding in staff and location search;
• Providing a ready business model;
• Technical, legal, and economic support;
• Advertising efforts and brand promotion assistance in a specified area;
• Staff training;
• Management training;
• Consultation on company development.

It's crucial for the franchisor to understand that the performance of the franchisee's retail outlet not only affects the brand's development but also its reputation. Therefore, addressing any disputes that arise within subsidiary companies is necessary.

Franchisees, in turn, commit to paying all specified amounts in the commercial concession agreement and adhering to the company's rules and standards.

Selling a Franchise

The final stage is selling the franchise. According to experts, the most effective method is through online platforms. Several approaches can be considered:

• Own website;
• Advertisements in relevant online communities;
• Social media group;
• Contextual and targeted advertising on Google and Bing.

Creating a personal website requires specific knowledge and skills in promoting your portal on the internet. To ensure successful website promotion, seek assistance from professionals in the field.

Additionally, participating in franchise-themed exhibitions is a popular strategy for promoting your franchise.