Entries by Hamilton Pratt

How does a franchisor make money from its franchisee network?

In a nutshell, franchisors make money by having successful franchisees. Franchisors should not make money from their network by charging a high initial fee with a large profit element. The purpose of the initial fee is to reimburse the franchisor the very substantial costs of recruiting and training franchisees, providing the initial obligations to enable […]

Will a franchisor help me find, fit out and furnish premises?

Not all franchises are premises based and those that are, often do not require retail premises. If a franchise requires a franchisee to have commercial office premises there is a large stock of such premises that are available and franchisees normally do not need any assistance from their franchisor. In a retail franchise the right […]

What is an operations manual and do all franchisors provide their franchisees with one?

In franchising there are two important documents. First, the franchise agreement which is a formal agreement between a franchisor and a franchisee. It is “written in stone” so that once a franchisee enters into the agreement it cannot be altered without the franchisor and the franchisee agreeing to make the alteration. The other important document […]

How does a franchisor use the initial franchise fee?

Franchisors charge an initial fee which is sometimes split between a “licence fee” for the rights to operate as a franchise and a “package fee” for equipment, stock and other items supplied by the franchisor. Franchisees need to make sure when they are comparing the initial fees of various franchisors that they include all initial […]

What’s the difference between a franchise and a licence?

At one level there isn’t much difference because a franchise is simply a “tough” licence under which the licensor imposes a great deal of obligations on its licensees and regulates every aspect of how the licensee operates its business. It is for this reason that businesses who are thinking of franchising need to establish whether […]