WHAT IS A FRANCHISE?

 A simple definition of the concept of a “franchise” is as follows¨

- an agreement between two independant people or businesses that one (the Franchisor) givesthe other (the Franchisee) the right to exploit a “mark” or product in exchange for various financial considerations (initial paymentplus royalties)

A Franchise – Is it a guaranteed formula for success?

The businesses who are based on this formula of franchising have much higher survival rates than normal new businesses. The probability of success is almost 3 times higher than that of a normal new business.A franchise business is one with atried and tested success rate and in which the Franchisor offers all its knowledge and knowhow and lets us share the common experiences of people in its network who are enjoying success.In a franchise, we take advantage of the economies of scale of an established network of businesses.However, this does not mean that the franchise system givesguaranteed success.There are peple who are simply not suitable for this type of business or Franchisors who do offer opportunities which are not as good as they claim.

Is this Sector developed?

There are more than 450 Franchisers and nearly 16,000 business run by Franchisees,

More than 65,000 jobs, including direct and indirect contracts, and a volumn of billling of more than 2,400 millions of Euros per year, which demonstrates clearly the maturity of the development of this sector.

At this moment in time, in the United States, more than a third part of all sales to the public take place in establishments which operate under this system.In France and United Kingdom it is calculated that franchises represent between 18% and 20% ofits commercial activity.In our country we are still far from reaching these figures, and franchises account for 4%.However, these facts show us an example of the state of development at the present time, with its future guaranteed.

What steps should you take before you join a franchise?

The first step that you must take is to collect information about the franchise, taking into account such factors as – whether the individual style and characteristics suit you, what Franchisees exist already, its form of business and analyise if your personal characteristics fit in withthe franchising system.

What are the principal points that you must take into account?

There are two aspects that you must take into account.

The first is to make a good choice, based on yourknowledge and the suitability of the sector of the activity for you, its businesss concept, the characteristics of that particular franchise , its solvency and the guarantees offered by the Franchisor.

It is fundamental that you make the right choice for you to succeed in a franchise.

The second aspect is the dedication and personal effort that you will have to be willing to give.

However good a franchise systems is, it is very difficult to achieve succes without considerable personal effort..

Do I have to meet any specific requirements?

Not everyone adapts perfectly to the franchise system or meets the requirements of the Franchisers.If you are an independant person, it is possible that you will have difficulty in following the guidelines set down by the Franchiser.Normally all Franchisers insist that their Franchisees adapt tocertainpersonal profiles and requirementsIt isimportant that you can also count on the support of your family and that you are a dynamic and hardworking person.Logically, you must have the necessary level of financial solvency available to make the investments required by the Franchiser.

What can I expect from the Franchiser?

The Franchiser will offer you all the necessary information for you to start your bsuiness in the same way as the rest of the components of the group. He will do this through Operating Manuels and training courses. He will allow you the use of his name and give you help and support for the duration of your contract.

How can I be sure that the infomation that I receive and that is included in the contract is true and reliable?

Not all Franchises offer the opportunities that they claim to do. You yourself need to know how to differenciate from one to another.The only safe way is to obtain the maximum information possible about the Franchiser and compare it with those businesses that are already operating.Never trust verbal claims and insist that these are always included in the documentation.Our advise is that you go to a professional in the consultancy who can help you choose properly the kind of franchise that

suits you best and who can give you wide and reliable information about the Franchiser.

How to choose a Consultancy?

Make sure that they know the franchise business and have wide experience in it.If they have worked with specific Franchisers, they should declare this clearly and should not charge fees for their services, amongst which include personalized financial reports, checking of Franchise contracts and offering the option for youto raisefunds though agreements set up with financial institutions.

Which sectors are the most suitable?

In the world of franchising there are more sectors than you probably imagine.The most suitable sector for you will always be that which is compatible with your personal characteristics and at the same time will satisfy your expectations.

What type of investment is neededto acquire a franchise?

 In a franchise, the investment depends of many factors.The concept of the business, its sector of activity, the Franchiser etc. As a general rule, you count on an average investment of between 36,000€ and 84,000€.However, there are franchises at much higher levels of investment, depending mainly on the amount of m2 and the investment in fixed asssets.It is not necessary that you should have 100% of the investment required available.If you have can personally finance 40% or 50% of the total investment , there are differing types of finance, specifically adapted to the needs of each future Franchisee, oferred by certain entities.