Become a franchisor

To become a franchisor it is first and foremost necessary to have an idea and as a result a product or service with features that are specific, original and differentiated in relation to the market. Starting from this idea one can move from research of the market and its participants (or the competition), towards understanding the concentration of potential clients around a future network and the environment in which one must take action.

Franchising is, by definition, a commercial formula for which the law also foresees a transfer of know-how from franchisor to franchisee, where know-how is defined as “the practical, unpatented knowledge base drawn from experience and tests executed by the franchisor, a knowledge base which is secret, substantial and identified” (law 129/2004).

Once the creation and exploration phase is complete, it is necessary to think about two main documents for one’s franchising network: the Operating Manual and the franchising contract. It is necessary for the latter to contain all the guidelines which are compulsory by law and essential for those who want to become a franchisee and therefore to directly assess the terms and conditions for joining your franchising network.

This being said, it is useful to list as follows some of the most common errors made by franchisors:

  • Failing to monitor the development of their network closely enough.
  • Not taking responsibility for promoting the network in the territory and not acting on feedback from advertising in trademark-related communication or, worse still, not using it at all.
  • Not taking care to provide information and enter into dialogue with their own network and hence, not only becoming isolated from events, but also allowing the network to depart from the market positioning.
  • Not implementing continuous training and not making the effort to train the franchisee’s staff.
  • Failing to constantly check on the network and allowing mini-groups of “pluri-franchisees” to spring up which represent tomorrow’s threat; or allowing serious deviations to occur in the use of the business idea.
  • Allowing the use of improper managerial practices which will certainly lead to financial difficulties for franchisees and become harbingers of problems for the network.
  • Giving absolute priority to drawing benefit for the purchasing department while being unfaithful to the aims of the franchise.

 

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European Franchise Federation

Confcommercio

World Franchising Council