The document provides an overview of franchising, including what a franchise is, examples of franchises, factors for success or failure, and revenue streams. It discusses that a franchise involves a franchisor granting a license to a franchisee to use their business model and brand name. Successful franchises view it as a long-term partnership, provide comprehensive training, undertake research and development, and tie franchisor income to franchisee success. Now may be a good time to franchise as people seek new opportunities and franchises generally have higher success rates than independent businesses.

2. AGENDA
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Agenda
Introduction
What is it ?
Examples
Top Rated Franchise
Sucess Rate
Industry overview
Suitability
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Revenue Streams
ROI
Types
COMMON FACTORS
Is it a Good Time?
Summary
Questions & Answers
THANK YOU!

3. INTRODUCTION
FRANCHISE SYSTEM
=
FRANCHISE
+
FRANCHISOR
+
FRANCHISEE

4. INTRODUCTION
o A franchise is a license granted by a
business to another business to make
and sell goods/services.
o A franchisor is the owner of the
business who grants the license.
o A franchisee is the person who
purchases the business name.

5. WHAT IS IT
Normally referred to as
“Business Format Franchising”
A contractual long-term relationship
Grant of a licence to franchisee
Franchisee gets:
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Tried and tested product/service
Profitable proven business model to follow
Experience and know-how of the franchisor
Entitlement to use the trade name / mark
Entire package

6. EXAMPLES

7. EXAMPLES

8. TOP Rated Franchise ( 2009
)

10. Industry Overview
At the end of 2007 in the UK:
 Industry worth £12.4bn
 806 franchise systems
 Property services
 Personal services
 Business and commercial services
 Hotels and catering
 Store retailing
 Transport and vehicle services
202
159
156
115
101
73

11. Industry Overview
 Regional Distribution of Franchised Units (%), 2005 – 2007
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South East
South West
London
North West
East Midlands
Scotland
Yorkshire
West Midlands
North/North East
Wales
East Anglia
Northern Ireland
20
13
12
10
8
8
8
7
5
5
3
1

12. SUITABLE?
1. Is it a financially viable business?
- Would it still be viable with an additional 15% costs?
1. Is there long-term and widespread demand for
your product / service?
2. Can you prove that it can work in other parts of
the country and without your skills and ability?
3. Are the business processes easily replicable?
4. Can an unskilled person easily be trained
to run the business / sell the product
or service?

13. NOT SUITABLE YET!
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A business that is failing
Low gross margins
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Where product range has short life-cycle
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(e.g. Tower of London gift shop)
High technical skill levels required
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(e.g. toy)
Geographically defined market - no potential to
repeat in other places
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(e.g. newspaper delivery)
(e.g. brain surgery)
Not proven
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(e.g. only been trading for 3 months old)

14. TYPES
 Investment Franchise
Investment franchises are operated by
the fast-food and restaurant chains,
as well as by some well-known hotels.
 The franchisee has overall control of the business
 Employs his or her own senior management and staff.
 Executive Franchise
 Involves the provision of professional services,
 Financial advice, legal services or recruitment assistance.

15. TYPES
 Retail Franchise
 The franchisee runs the outlet, employs staff
and displays goods approved by the franchisor.
 Distribution Franchise
 A distribution franchise permits the
franchisee to operate from a depot or
central office that is usually owned by the franchisor.
 Depot Franchise
 The franchisee is the operator and sole occupant of the
depot. This type of franchise is generally available to
courier companies and parts suppliers, for whom a depot
is an essential part of the business.

16. TYPES
 Job Franchise
 Usually a one-person business, operated by the franchisee
from home. Home-delivery operations, such as lawn care,
car repairs or furniture refurbishing, are examples of job
franchises.
 Management Franchise
 A management franchise is where the franchisee will be
responsible for both running the franchise and employing
and managing a team of operatives.

17. REVENUE STREAMS
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Initial Franchise Fee
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Average cost is £52,500
On-going Fees
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Management Services Fee (Royalty)
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National Marketing Levy
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Average 7.5% of Gross turnover (never profit)
Average 1.9% of Gross turnover
Mark-up on Goods
Service Fees
Training Fee
 Others: e.g. re-sales (transfer fees)
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The franchisor should not be looking to make a profit from the initial fee.
Source: (Nat West Survey 2008)

18. R.O.I

19. COMMON FACTORS
 Successful Franchises
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View franchising as a long term partnership
Provide comprehensive training
Undertake ongoing research & development
Franchisors income linked to the success of the
franchisees

20. COMMON FACTORS
 Failed Franchises
 View franchising as an income stream to prop up a
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failing business
The business is not proven
The business has limited longevity
After initial training, they leave the franchisee on their
own
Have little or no financial incentive in the success of
their franchisees
Do not undertake ongoing research & development

21. IS NOW A GOOD TIME?
 People being made redundant, have a pay off and its difficult
to find new jobs
 Businesses have less money to expand using company owned
expansion
 The success rates are higher for both franchisors and
franchisees than for non franchise businesses
 For Franchising to succeed still need to apply proper / sound
business practices

22. IS NOW A GOOD TIME?
Your Local Business
with National Backing
45% of People would prefer to buy from a franchise business
Source: bfa Franchise Awareness Survey 2006

23. SUMMARY
 A well established industry
 Create a national or international
brand
 Cost Effectively
 Quickly
 A number of elements to developing
a ‘successful’ franchise
 Sources of Help and Advice

24. Do you
have any
questions?

26. !!!!!!!!!!!!!!!!!

27. For More Help
ContactROHIT VARSHNEY
+91-9911158061