The person who has developed the original Business Concept and develops the franchise model.

The investor who purchases the right to trade using the Franchisors concept, intellectual Property & know how & Support.

The documented system and processes which outline how the franchise operates

The contract that is signed by the Franchisor and Franchisee which dictates the terms and conditions of the franchise and frames the relationship

The contract that is signed by the Franchisor and Franchisee which dictates the terms and conditions of the franchise and frames the relationship.

The franchisor grants the franchisee, (also called area developer) a territory within which the franchisee agrees to open and operate an agreed number of franchised units according to an agreed development schedule. No Sub Franchising rights granted to the area developer  (2 parties; Franchisor & Area Developer)

– Similar to above but the franchisee acquires the right to sub franchise the business model within a country (Master) or a territory within a country(Regional). They will be required to run their own units/locations but they also acquire the right to sell sub franchises within their territories (3 parties; Franchisor – Master or Regional Franchisee & Sub Franchisees).

Franchising has become an established way for new and existing entrepreneurs to run their own business through replicating the successes of established and successful business owners, who have already proven the financial viability of a particular business model.  The individual/company purchasing the franchise, accesses the expertise, intellectual property and know-how of the original business owner who has successfully established the business model and the brand identity. The originator of the business model normally owns the trademark that the business operates under. They sell the rights to their franchisee partners to trade under that trademark, that identifies all aspects of the business model to the franchisee and put in place a programme of continuing and ongoing support for their network of franchisees. 

A franchise is a business arrangement where the owner of a product or service under a recognised tradename agrees for a fee or a combination of fees to allow another person or business to trade under that trademark, using the same products, service and proven business methodologies and trademark and passes the benefit of its know-how and expertise to that person/Company    

The most popular use of the word franchise has arisen from the development of what is called a business format franchise. This is the format of franchising that most of the international franchise accreditation bodies are interested in.  The business Format Franchise is the grant of a licence by one person (the Franchisor or originator of the business model) to another (the Franchisee or the purchaser of the franchise), which entitles the franchisee to trade under the trademark/tradename of the franchisor and make use of an entire package, comprising all of the elements necessary to establish a previously untrained person in the business and to run it with a programme of continual assistance on a predetermined basis.

Dr Martin Mendelsohn 

The EUROPEAN CODE OF ETHICS FOR FRANCHISING is a practical ensemble of essential provisions for the governance of the relations between a franchisor and each of its franchisees, operating together in the framework of the franchise network. The overarching principles of ethics that underline this set of provisions are good faith & fair dealings, which translate as franchisor-franchisee relations based on fairness, transparency and loyalty each of which contribute to founding confidence in the relationship.The principles of the CODE are applicable at all stages of the franchise relationship; pre contractual, contractual and post-contractual stages.The EUROPEAN CODE OF ETHICS FOR FRANCHISING constitutes the franchising industry’s Self-Regulatory Code and is there for all stakeholders in the franchise industry in Europe to look to for guidance on franchising generally.The CODE’s clear and unambiguous principles are not in contradiction with national laws and fundamental rights in the EU with the continuing objective of setting up a more efficient framework for franchising.In particular, the CODE is the foundation stone of the action of the EUROPEAN FRANCHISE FEDERATION’s National Franchise Association Members. Their respective membership rules, accreditation as well as disciplinary schemes must comply with the standards set in the CODE. The CODE, in its entirety, is binding for all EFF Members as well as their respective memberships. The CODE is endorsed by all EFF Member Franchise Associations each of which is committed to its promotion, interpretation and implementation in their own country. Each Association is responsible for ensuring that the Code is publicly available, in particular to all those entering the franchise industryFor access to the full code clear here                 <codeofethicslink>

Advantages in franchising for Franchisors

Accelerated Growth

ou grow your network faster given it is the franchisees investment capital that is growing your brand footprint.

Faster Market Penetration; You can cover other geographical areas, safe in the knowledge that you brand and business reputation are in safe hands with your franchsiees and you have oversight and control over their operational standards they are delivering.

Control the Delivery

Through your operations manual and the parties obligations set out in the legal agreements, as franchisor and originator of the business model you can exercise control over your franchisees operational standards.

Self-Motivated Operators

It is well proven that even the best company operations manager wont mange a business operation quite as tightly as an independent franchisee operating their business albeit to your business model. 

Reduced Day to Day Involvement

You as the franchisor have no responsibility to resource up your franchisees locations. It is their business and the responsibility lies 100% with them to manage the business in line with the brand expectations.

No Direct Legal Liability

Franchisees are required t provide indemnities to the franchisor, protecting the franchisors from any claims from customers of their franchisees, unless of course the cause of the customer complaint was down to negligence on behalf of the franchisor.

Heightened Brand Awareness

The quicker your network grows the more the brand is seen and recognised.  Franchising can fuel that growth and drive brand awareness more than company operations.

Generate Income

MSF & Marketing Fees; Delivering a good franchise programme generates multiple income streams for Franchisors, from the initial franchise fees payable by franchisees to training fees, to the monthly Management Services Fees and monthly marketing contribution fees. 

Leverage a proven Business Model

With successful franchising you don’t just benefit financially from the financial success of your own proven business model but you can leverage that successful business model to generate additional income streams from franchisees who are accredited with the opportunity to run their own business to your successful business model.

Improve COCO Operations Efficiencies

As mentioned earlier, even the best company managers don’t tend to outperform your best franchisees because of the “owner operator” mentality of the franchisees.  Often the good franchisees will find ways to grow turnover, reduce costs, improve margins in the business model that you didn’t even think existed. They can assist in setting improved KPI’s and performance metrics for the company operations as well as the franchise                                         network.