FRANCHISES

What is a franchise?
A franchise is a modern method a company uses to distribute its products or services through retail outlets owned by independent operators. The company grants the independent operator the right to use its marketing methods, trademarked goods and services and the goodwill and name recognition developed by the company. In exchange, the independent operator pays an initial fee and monthly royalties to the owner of the franchise.
Franchising allows a franchise owner to grow more rapidly with far less legal and financial risks and exposure.

Parties
The franchisor: A person or company that gives permission to another party to use their own trademark, trade name and business system, including the technical know-how, expertise and secrets used to achieve success.

The franchisee: This term refers to the party that pays the franchisor an initial franchise fee and a percentage of the individual store's turnover as an ongoing franchise fee (royalties) for the right to develop an independent business using the franchisor's trade name and business system.

How do you set up a franchise?
At Infomarca, we recommend that anyone interested in developing a franchise should take into consideration the following factors:

1) Reviewing the business to determine the source of success
2) Ability to transfer the business know-how and expertise to the franchisees
3) Liabilities and rights of the parties
4) Preparation of the operation manual

What should a franchisable product be like?
A franchise should produce a novel and successful product.
The franchising company should offer a product or service built around a unique or unusual concept and an original marketing method (packaging, system to promote impulse sales, sale and aftersale services, etc.). Business franchising is about duplicating an established, thriving business, not an unsuccessful failure. In fact, a franchisee invests money in a franchise in order to reduce financial risks while simultaneously maximizing return on investment. Thus, franchise opportunities must be thoroughly scrutinized.

Transferable Know-how
The knowledge required to operate the franchised business should be easily transferable. This aspect is considered a crucial component of successful franchising. Even though the term know-how originated in the United States is widely used all over the world, it does not have a univocal meaning.
Know-how has been defined as the knowledge and technical skill required in a given business field and the practical knowledge required to achieve a certain goal. In a broader sense, it refers to all trade secrets and technical skills which are considered confidential information.
This general knowledge upon which the fledging business is based should be reflected in the franchise operation manual that will help the franchisee to operate the business successfully.

Franchise contract
All the liabilities, rights and responsibilities of each party are presented in a legally binding contract and subjected to scrutiny and discussion by both parties. The franchise contract has special characteristics that make it different from other distribution contracts.
The franchise contract is not an association contract per se, but it can indeed be considered a "co-operative venture" contract since it is crucial to the achievement of a harmonious relationship and uninterrupted contact between the parties.

Trademarks and Patents
Although not a sine qua non condition, the franchisable product or service should have a proven track record, and it should be able to demonstrate its capability to capture market share in the face of competition. The franchising business should definitely register all its marks, logotypes, trade names and patents in order to avoid future third-party disputes or problems with any member of the distribution chain.

Workflow
The staff of professionals at Infomarca has developed a work methodology to guarantee the success of the franchising system for both the franchisor and the franchisee.

Our method includes the following steps:

I - Reviewing the parent business
II - Development of a questionnaire to be addressed to the franchisee
     a) Description of the workplace
     b) Description of the franchisor's business system
     c) Employees: classification of roles, tasks, etc.
     d) Suppliers: product manufacturing
     e) Product distribution
     f) Development of supervision systems and insurances
     g) Advertising, marketing strategies, etc.
II I- Drafting of the franchising contract
IV - Drafting of the operation manual
V - Signing of the contract between franchisor and franchisee
VI - Supervision over franchisee's compliance with the franchising contract
VII - Amendments to the contract or the operation manual

Duration of franchise agreements
There is not a single-step process for setting up a franchise agreement. Rather, the process involves a maturing phase, the development of a set of procedures and a joint work plan involving the franchisor. The entire start-up process may last two months or a single year, depending on the level of complexity and the franchisor's ability to collaborate in the knowledge transfer process.

Franchise cost
Franchise fees vary drastically among different franchisors, depending on the complexity of the franchise model and system. Some franchises require longer planning, while others involve a simpler and faster development process, in which case the franchise cost is considerably lower. Thus, the franchise cost will always depend on the duration of the franchise agreement and the complexity of the system to be implemented.

Infomarca offers a special, promotional fee for entrepreneurs who have always dreamed of developing a franchise system.
Besides, we have special offers for our regular clients who have patented their marks.