Entries by Hamilton Pratt

Does a franchisor provide franchisees with sales leads?

Every franchise is different and there is a very broad range of franchises out there. The great majority of franchises do require franchisees to sell and very few franchise businesses can simply rely on leads being provided to them.  Within that simple statement there are a number of variations. Some franchise agreements envisage that the […]

What is a master franchise?

There are many ways that a franchisor can expand overseas.  Traditionally one of the favourite ways is to appoint a master franchisee who becomes, in effect, the franchisor in the overseas territory.  This is a good arrangement where the franchisor does not have the management resources or indeed the knowledge of the relevant market and […]

A franchise I’m considering investing in hasn’t pilot tested its concept. What should I do?

Franchising is not about licensing an idea.  What it is about is licensing a proven business system.  Whilst many businesses operate profitably, that does not mean that they are able to franchise because there could be any number of reasons for the profitable operation.  They could include the fact that the management team is brilliant […]

Why do franchise investment levels vary so much?

Franchises, like businesses in general, come in all shapes and sizes. Some envisage franchisees working from home, perhaps on a  part time basis, others may require a franchisee to operate from a van and yet others may envisage very substantial retail premises being used for the purpose of the franchise. You should look at franchises […]

How many years is a typical franchise agreement?

The great majority of franchise agreements in the UK last for five years. There are two reasons for that.  The first is that generally franchisees make a loss in their first year, make a smaller loss/break even in their second and then make a profit in their third, fourth and fifth years.  Secondly, competition law […]

What happens to franchisees when a franchisor fails?

Fortunately, for the reputation of franchising in the UK, this happens very infrequently.  When a franchisor decides that franchising is not the way forward, having recruited franchisees, generally such a franchisor cannot immediately withdraw from franchising. It has to serve a reasonable period of notice on franchisees and usually that period of notice will not […]

What should a franchisee’s earnings potential be based on?

Generally, prospective franchisees want to know two things about the earnings potential of a proposed franchise business.  The first is how much money they are going to make and most franchisors respond to that on the basis that they cannot tell because it depends on how hard a franchisee works, how good they are, etc., […]