Franchising is a business model which is becoming increasingly common. The model allows those wishing to set up in business to start with a "ready made" idea. For established concerns looking to develop and grow, franchising may also be a route by which this can be achieved.
In essence, the term "franchising" is used very loosely to describe a business relationship in which the franchisor grant to franchisees the right to carry on a particular form of business to which the franchisor has rights.
A franchise is normally based on a unique product or service, a method of doing business or a trade name, goodwill or patent that the franchisor has developed. A franchisor is usually entitled to charge each franchisee a one-off payment to join the franchise, followed by a series of royalty payments throughout the term of the Agreement.
The Franchise Agreement normally provides significant detail regarding how the product, service or business is to be sourced, produced, distributed and promoted. This will be consistent for all franchisees in the same franchise.
It is important to examine all the pros and cons before finally opting for franchising. The franchisor gains by potential rapid expansion of business to achieve regional, national or international markets, striking agreements which ensure overall control is retained whilst generating initial and royalty payments.
Similarly, for those starting up in business, franchising gives the opportunity to be your own boss while receiving the continuing support of the franchisor and the confidence of using a tried and tested business format.
To assess fully whether franchising is right for you, it is important to get sound legal advice. As members of the British Franchise Association,
Thorntons' specialist team has the expertise not only to advise you of the options, but to deal with the wider legal and business issues.