Franchise FAQ

Answered by John Linehan, Managing Director of Foot Solutions

JOHN SAYS: In my opinion a good franchisee is someone who can operate as a complete all-rounder. As a franchisee you need to be able to work with your employees at every level of the business. You need to have the vision and desire to succeed. You need to be able to drive the business forward while at the same time staying focused on the basics of its day to day requirements. You need to find balance between being an employer and a team player. But most importantly you need to remain disciplined and trust in the franchise system. There are many areas that you can focus your time on but following the system is the most critical for any successful franchisee.

Q. ARE THERE ANY SPECIFIC CIRCUMSTANCES WHERE THE FRANCHISOR IS ALLOWED TO TERMINATE THE AGREEMENT?

Answered by Pam Bader, OBE, FRSA, the CEO of MOLLY MAID UK

PAM SAYS: New franchisees will be taken through their Franchise Agreement, and this will differ slightly with each business format. The Franchise Agreement specifies the terms and conditions to operate the business in accordance with the system and these 'rules' must be adhered to by the franchisor and the franchisee to protect the brand and the business as a whole. The last thing the franchisor or the franchisees want is a business failure - this damages both parties and the brand. Each party should work together to generate the best profit and business growth for everyone. Occasionally if a franchisee is not keeping to their side of the franchise agreement - not working to the specified system or incorrectly representing and using the brand, a franchisor will offer support and further training to help them get back on track.

If there is persistent activity that is against the franchise agreement, especially if it is affecting payment of ongoing management fees and royalties, as a last resort the franchisor has no alternative but to terminate the franchise agreement to protect the brand integrity and the company profitability.

Q. WHAT DOES THE ROYALTY FEE OR MANAGEMENT SERVICE FEE COVER AND HOW IS IT CALCULATED?

Answered by Ron Hutton, Sales Director of Chemex

RON SAYS: A Royalty fee is a recurring fee that is paid to the franchisor by the franchisee. It is generally accepted that this provides ongoing support and assistance for the franchise network. Royalty fees are often calculated as a percentage of the revenue of a franchisee.

There is no set amount for Royalty Fees. The percentage charged should be reflected in the amount of support you receive from your franchisor. The more service and support in terms of field support managers, lead generation, marketing and head office personnel time, the higher the investment. Royalty fees can be charged monthly, quarterly or annually although monthly seems to be the accepted norm.

Q. HOW DO FRANCHISORS ASSESS THE SUITABILITY OF PROSPECTIVE FRANCHISEES? IS THERE NORMALLY A SELECTION PROCESS? IF SO WHAT DOES IT ENTAIL?

Answered by Simon Dalziel, Franchise Director of Bluebird Care

SIMON SAYS: Every franchisor will have a franchisee recruitment procedure. It is important that this involves a selection process to ensure the right quality of franchisee is recruited into the franchise.

Clearly each franchisor will have a different franchisee profile but it is important that a franchisee coming into a franchise network feels it is a two way process - the franchise must be right for the franchisee and the franchisee must be right for the franchise. All franchisors will interview prospective franchisees (which should take place in the franchisor's office) and some may even use psychometric testing to ascertain the right franchisee profile.

At Bluebird Care we interview every prospective franchisee having received written details from them prior to the meeting. We will then explain in detail how our business works and also assess the applicant as to their suitability to own a Bluebird Care franchise.