Franchise Fees & Payments - 3 Things Franchisees Should Ensure They're Getting Back In Return

So franchising could be an attractive way for aspiring but novice business owners to kickstart their entrepreneurship journey. The questions is, what is being offered in return for signing over that large cheque? More importantly, is it worth the money?

Related: Taking Up A Franchise - What It Is Not About


Many business operators have jumped onto the franchising bandwagon and adopted this particular expansion model. In comparison to organic expansion, franchising could provide lower risks for franchisors and a faster rate of unit development since they are not operating the unit themselves. For all the risk they are transferring to franchisees, along with the money they are receiving, franchisors need offer something back in return at least of equal value. So what are they?

1. An Established Brand Name

One of the biggest perks for acquiring a franchise is the fact that you will be setting up a business with a known brand. A recognized brand is one of the fundamentals of franchising and it is likely this aspect that brings customers through your doors. On the other hand, this may not be really totally relevant if your location is outside of the franchise’s home territory. Instead, an unknown brand may provide a whole new market for you to tap into but you’ll have to figure out whether the potential for the business exisits and how much work you are willing to put into marketing efforts for your territory. Whatever the case, consider the finanical outlay required for obtaining the rights to use the franchise brand trademarks and see if it makes valuable sense.

2. Transfer Of Proprietary Knowledge

In most cases, the franchise fee paid paid to franchisors should also include the expenses for training for you and/or your staff. This training is crucial in preparing you to successfully replicate the franchise concept and operations. But some franchisors fail to understand the importance of this training program and instead try to wing it when it happens. Ask the franchisor what this training program involves - if they fail to provide a clear answer or direction, perhaps they themselves haven’t figured that part out yet. Futhermore, try to understand contingency arrangements in the event you or your staff don’t make it through the training program. Be sure that you'll be able to learn all the skills and knowledge required to propel your franchise business to success. Unless you’re open to being a ginuea pig, a franchise with an unclear training program doesn’t sound so appealing.

3. Continuing Mentorship & Support

One of the things that makes a franchise relationship work between franchisor and franchisee is the continuing level of support and assistance, and this will likely make up the basis of your on-going payments in the form of royalties. Remember, the franchisor is supposed to provide leadership and hand-hold you throughout the franchising and operational process, through good and bad times. It doesn’t sound right if you’re holding each other’s hand and trying to figure it out what’s going to happen next. Or worse, find that you’re alone and have no idea how to proceed.

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