FAQs about franchisees

Does a franchisee own a business?

A franchisee can be considered a business owner, although they are somewhat more limited than independent business ownership. The type of business that they own in particular is known as a franchise and not, for example, a startup or a company. A franchisee is required to abide by the franchisor’s rules and regulations as set out in the franchise agreement.


What do you need to do to become a franchisee?

For those wondering what it takes and how to become a franchisee, it’s important to be aware of the fact that every franchisor has its own particular requirements for the franchisee onboarding process.

Prior to becoming a franchisee, a prospective franchisee should meet certain franchise requirements. They should, for instance, have decent credit scores in order to secure funding as well as a lump sum for the initial investment. As a result, cash on hand and access to funding is another crucial requirement. Furthermore, previous industry experience such as management experience could be considered a plus.

As a prospective franchisee, you should also be aware that the process starts with finding a suitable franchisor, attending a discovery day, speaking to current franchisees under the brand, signing the franchise agreement, selecting a location for business operations, undergoing training, recruiting staff and training them and then opening their franchise unit.


What are the franchisee’s responsibilities?

There are several main responsibilities of a franchisee:

  • Paying the initial franchise fee when they sign their franchise agreement. 
  • Paying the royalties to the franchisor,  as stipulated in the franchise agreement. 
  • In some cases finding a suitable location, leasing premises or even building them from scratch. 
  • Attracting, hiring and training new employees according to the franchisor’s rules. 
  • Run the business according to the franchisor’s operations manual. 
  • Guarantee the same quality of products or services to their customers.

How much does it cost to become a franchisee?

Although there are both low-, medium- and high-cost franchises, on average, the cost of a franchise in the UK is in the region of £50,000. However, every franchisor determines their own franchise fees and there is no recognised industry standard. A prospective franchisee should therefore have the right funding to finance their franchise fee but also be prepared to cover ongoing costs until the franchise unit breaks even.


What are the benefits of franchising for the franchisee?

One of the major advantages of franchising for franchisees is that these entrepreneurs are in business for themselves but not by themselves. Other benefits include:

  • Receive a wide range of support from franchisors in the form of business advice, training, communicating and ironing out minor issues, etc. 
  • Take advantage of an already established brand name. 
  • Enjoy buying power owing to the fact that franchisors have already pre-negotiated terms with suppliers. 
  • Earn returns on investment through profits earned from their operations. 
  • Face lower risk and a much lower chance of failing as a business owing to the franchisor’s proven and profitable business model. 
  • Having immediate access to a customer base, which means less time and resources that need to be spent on market research and customer acquisition.

Can a franchisee be “fired” or removed?

If one of the questions on your mind is can a franchisor terminate franchise agreement, the short answer is “yes”. However, there are certain conditions under which a franchisor can terminate the franchise agreement. These will be stipulated in the agreement itself and may include cases of non-performance, damage to the reputation, non-compliance with operating standards and procedures, etc. This can take place before the end of the period for which a franchisee has signed up to be one. However, these cases are rare and many franchisors often invest significant resources into ensuring that their franchisees perform as expected.


When can a franchisee terminate an agreement?

Many franchisees ask if they can terminate their franchise agreement once it has already been signed. In general, the franchise agreement will specify under which conditions termination on the part of the franchisee can take place. This can happen before the term for renewal expires or even early on in the business relationship.

However, it’s critical for a franchisee to strictly abide by the franchise agreement, seek legal advice in the event of disputes as well as terminate the agreement in a last-resort scenario. Many franchisors will seek to help their franchisees become successful and this support should be grabbed by the franchisee with both hands when offered to them. This is because franchising is a rare opportunity to be in business and get strong and unparalleled levels of support from another expert in the industry who wants to see you succeed.

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