Franchise FAQ

Q. AM I ABLE TO NEGOTIATE THE FRANCHISE AGREEMENT?

Answered by Sandra Venables, Director of Well Polished

SANDRA SAYS: Quite simply, no. It is vital that everyone within in the franchise network is operating under the same terms so that each individual franchisee has the same opportunities as their peers. This reflects the conditions of the European Code of Ethics for franchising, which outlines the necessity to operate a 'fair' system. From my perspective as a franchisor, because all of my franchisees are on the same contract I'm able to make performance comparisons and see the effects of the introduction of new income streams instantly, which makes my job much easier!

Of course, even though your franchisor will not be prepared to negotiate the agreement, you should still take it to a specialist franchise lawyer before you sign. Your lawyer will be able to explain the implications of the agreement and will indicate whether it presents a fair contract for you as a franchisee, as well as the franchisor.

Q. HOW WILL BUYING A FRANCHISE AFFECT MY WORK LIFE BALANCE?

Answered by Emma Parker, Franchise Manager of Caremark

EMMA SAYS: Owning and operating your own business brings with it a flexibility and autonomy that is very hard to match. A management franchise (such as Caremark) allows you to develop and promote your business, while having the comfort of a team of staff running the day to day operations. This combined with back-up from a fully committed head office support team creates a business opportunity that allows you to enjoy the rewards of your hard work.

Many of our franchise owners comment that their commutes have been slashed as they have the freedom to base their office in close proximity to their homes. Additionally many franchise owners choose a joint family partnership, where the benefits of a successful business can be enjoyed by all and working together can help create a 'family friendly' lifestyle.

While the initial growth phase of a management franchise does require valuable input, once established, you will have a profitable business that allows you the freedom of choice.

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

Answered by Mike Parker, Managing Director of Minster

MIKE SAYS: The royalty fee is the ongoing payment made by the franchisee to the franchisor. It is typically a percentage of the franchisee's turnover and is often the main way in which the franchisor generates an income. The range of fee percentage can vary significantly across industry sectors and even within the same sector. New franchisees should research this aspect and ask prospective franchisor partners what they charge and provide in return.

The fee is typically paid monthly, although it can be paid quarterly or even annually. As the ongoing size of the fee is related to the turnover of the franchisees' business, it is very much in the franchisor's interest to provide support and assistance to help the franchisees' business grow and prosper. This support can include lead generation, accounting functions, product/service support and development, marketing assistance, legal advice and in time, support in selling your successful franchise business!

Q. WHAT ARE THE ADVANTAGES OF BECOMING A FRANCHISEE OVER A STANDALONE BUSINESS OWNER - ESPECIALLY IN THIS TIME OF ECONOMIC UNCERTAINTY?

Answered by Phil Morgan, Director of Hardsoft Computers

PHIL SAYS: There are several benefits in owning a franchise business rather than a starting a completely new business and it has been proven that linking with an existing business model gives a greater chance of success and survival. It is a given that any franchise you buy should give you some standard forms, procedures and guidelines to work within. However, I feel the greatest benefit is tapping into the franchisor's marketing experience.

It is very expensive to market a business and if you have no experience you can easily make costly mistakes. But your franchisor has both the knowledge and expertise to devise a marketing plan for you to follow and also provide high quality marketing materials. In our experience, I am sure like all businesses, we have made mistakes with marketing in the past that have cost a lot of money. The benefit now is that our franchisees don't have to make the same mistakes.