Franchising also known as concession sales comes from the distribution policy and refers to a mixture of indirect sale and usually direct sale. In franchising , a franchisor provides a franchisee with the use of a business plan for a fee. A template for the business plan helps you to keep track.
Often, the rights of use to trademarks, samples or designs and, for example, also recipes in addition to the provision of know-how are an important partthe franchiser services. Franchisors can grant local, regional and international licenses. Often the licenses go hand in hand with territorial protection .
Before the opening of a franchise business is the conclusion of the contract of the franchisee (still interested) with the franchisor. The franchisee is faced with the task of examining comprehensive contracts and deciding whether the agreements contained therein can be expected to lead to a good and lasting business partnership . There are central regulatory areas that may not be missing in any franchise agreement.
Franchise contracts are usually very extensive, because for every detaila clear regulation should exist. Before the actual franchise agreement is concluded, it is usually customary for letters of intent to be concluded. These are often accompanied by the advance payment of protection fees or deposits on the entrance fee. In this way, the franchisors protect themselves from know-how abuse and thus usually recognize the seriousness of the prospective customer.
Example of a time line until the contract is concluded
- Selection and first discussions, possibly already with presentation of the system in live operation
- Determination of first details, preliminary discussion financing
- Concluding Memoranda of Understanding, Memorandum of Understanding or LoIs (Letter of Intent)
- Payment of protection fee or deposit on franchise entrance fee as? Security? in advance
- Conclusion of the franchise agreement within a reasonable time
- Payment entrance fee
- Final clarification of the financing, if necessary funding from public funds
- Establishment or procurement of the franchise business, business or even vehicle and mobile
- Depending on the system assumption of payment obligations (goods, suppliers)
- Acquisition and procurement of system-typical furnishings