Fixed fee Franchising.
This method of Franchising is now being used by more and more service type businesses. Whilst you may have seen articles about fixed fee Franchising, you will very rarely if ever read how it actually works. Well here is a way of operating one.
Firstly you need to calculate the amount of houses from which a person can earn, let’s say £1,000.00 per week.
Based on this information you then need to “map” the area you are anticipating to Franchise. Mapping can be done by you, but there are companies who specifically do this for businesses and Franchisors.
Let’s say that Norwich has four areas, Norwich North, West, East and South.
You decide that the licence fee for those areas will be £750.00 each per month.
When you sell the first area the Franchisee is only allowed to operate in his/her exclusive area, specifically mapped by post codes, but the contract also allows them to take on jobs in an adjacent area if they are asked. This has to be okayed with you and the contract will specify that they will not be allowed in to that area if you sell it. The work for which they have received all the income is lost to them and passes to the new Franchisee.
A sensible thing to do is to limit the amount of jobs they can take. If they start to get work it will not be long before they are asking about how to obtain that licence as well. The usual next step is to give them a six month (you can take a nominal fee for this) option to decide whether to buy the full franchise or give it up. Either way it is a win win for the Franchisor, he has a partially developed area or the Franchise gets taken up.
This an exiting way to develop your franchise.
You can adjust your franchise fee as the franchise develops, remember you cannot change a fee that has already been awarded until that franchise comes up for renewal.
It should be pointed out that you never sell a Franchise, you award it.
This a brief resume of how it works, if you have any questions please ask.
I will post next as to how you set up your business to Franchise either way.
I should point out now that it is essential that you have the Trade Mark for your business.
This is given as free advice, if you decide to Franchise it is essential that you consult a Franchise lawyer.