Franchise Definition

The Franchise is both a form of cooperation and a sales method that serves as a partnership between legally independent companies for joint economic expansion.

Also, the term franchise with different meanings are used in the social area, in sports, in the media, and the insurance industry.

How exactly does franchising work?

Franchise or franchising is a distribution system based on partnership. The business idea of a franchisor already been implemented several times is taken over by you as the franchisee and implemented as a franchise at a new location.

In addition to the idea, you can also use the franchising, example, the marketing concept, the corporate design, the usage rights, and the suppliers – things that usually take a lot of time at the beginning of a classic start-up.

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You will also receive a range of support services and, for example, benefit from marketing, which is carried out by the system center for the individual Franchise in nationwide campaigns.

How do I become a franchisee? – 10 franchise steps

The franc plan and financing are, of course, also in focus before you can finally get started with your Franchise. Follow these ten steps if you want to become a one.

1. are you a Franchise founder?

  • On the one hand, the path to self-employment via Franchise requires that you are an entrepreneur type. However, very few are born entrepreneurs.
  • What is more important is the desire to work independently, to approach the matter with a high level of passion and motivation. And also, to want to take on responsibility and not to be afraid of decisions even in stressful situations.
  • Find out if you are a start-up type and take the start-up test above with our infographic.
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2. Which one is right for you?

  • With around 1,000 existing systems, the first step is to choose the right method for you.
  • However, you will surely have considered in advance which industry’s are of particular interest to you and which financing volume you can manage.
  • It quickly reduces the initially high number of systems. Also, you should make sure from the start that you look at high-quality and reputable franchising providers like

3. Check details: the pre-contractual obligation to provide information

Once you’ve decided on your favorites for the Franchise, it’s down to the details. In particular, you cannot, of course, assess business data and facts exclusively from the outside.

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In this context, the systems have a so-called pre-contractual obligation to provide information. The information that it should present to you – without being asked – includes:

  • What are the necessary investments?
  • What does the system center do for the franchise partners?
  • How have existing franchise partners developed?
  • What is the average annual turnover?

Also, you should make sure that the personal chemistry between you and the franchisor is correct. Do you feel comfortable, and can you imagine becoming part of this franchise family?

4. Write a business plan

  • Even if a franchise is successful in other locations, this is not a guarantee of your success. However, proper planning lays the foundation for future success.
  • Your business plan will help you validate the franchise system information and transfer it to your location.
  • We also recommend doing your own small market research on-site, in which you ask potential target customers.
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5. secure funding

  • Secure your financing. Equity is essential for starting a franchise. Also, there is often a loan to shoulder the investment at the start.
  • Based on the business plan, it is then a matter of convincing a bank of the financing of the project. Guarantee banks are at your side in the event of insufficient collateral.

6. sign a franchise contract

The franchise contract is the central document between you and the franchisor. It regulates all rights and obligations.

The most essential tip in advance: Check the deal with a lawyer who specializes in franchising. Important points that should not be missing in the franchise contract are:

  • the presentation of the system including the products and services,
  • a reference to the system manual,
  • Regulations on the trademark rights of the system,
  • the rules on the entry and ongoing franchise fees to be paid,
  • the contract duration and regulations at the end of the contract.
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Also, information on territorial protection and contract duration or termination wanted to be recorded. The franchise contract must be fair, after all, it is a partnership between the franchisee and the donor.

7. Build and deepen know-how

  • Franchise systems, for which the success of their new partners is essential, already offer extensive support in advance.
  • On the one hand, it is about getting to know the corresponding franchise system better.
  • On the other hand, there is also extensive support for drawing up the business plan and financing through the Franchise.

8. Find the location and “set it up.”

  • The economic success of franchising often depends on the right location, especially if it is a restaurant or a shop.
  • About the site or the required size, there are usually specific requirements of the system.
  • Also, franchisors have developed detailed criteria based on their numerous locations, which are very helpful when choosing a site.
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9. hire employees for the Franchise

  • In a franchise system, you usually don’t start as a lone warrior. Be it in the care sector, in the catering trade, or with a shop for delicatessen – you will hire employees right from the start.
  • Make a point of choosing the right employees and let the system support you.
  • Exchange ideas with other franchise partners to find out what qualities your employees should have and how you should ideally go about finding personnel for your Franchise.

10. Open up and win customers

  • The preparations are now complete, and the starting shot can be fired. Stir the drum for the opening – maybe you can also get the local press to report? Thanks to the standardized processes of the franchise system, you can quickly concentrate on acquisition and sales.
  • Even if you certainly benefit from the brand awareness of the overall system, customers will not fall from the sky.
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How much can I earn from franchising?

In principle, franchising can earn perfect money – in reality. However, the personality, the choice of system, and much more decide on the actual earnings from franchising.

A system can offer desirable earning opportunities for its partners, especially if you gradually open more branches and know “your business.” But if the founder is not up to the task, you can also fail with a successful franchise system.

The following factors can affect your franchise income:

  1. The industry
  2. The number of investment costs
  3. The ongoing franchise fee
  4. The type of funding
  5. The site
  6. The founder personality

How much you will ultimately earn you have to calculate individually in your financial plan . Find out here what role these factors can play in detail and how high franchising income can be.

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