Generally speaking, you never want to buy a franchise. The real winners where franchises are concerned are the people who started and run them. If you ever do set one up yourself, a clever way to do it is to give away the territories free of charge or for a nominal cost and then charge 10% of the gross in each region. This is equivalent to giving away the razor and charging for the blades. Make sure you hold the freehold of the property where each outlet is located (Mc Donalds do this) and charge the franchisee rent. Set your advertising spend at 9-14% of turnover (Specsavers). Set total salary limits at 30 - 35% of turnover.
Register the name worldwide as the cost of doing this will be the cheapest legal fees you will have to pay.
Once you have your system up and running you can licence manufacturers to make product under your name. This will attract licence fees, of course. A good example of this is Weight Watchers, sweets, scales etc. Develop simple and effective financial control systems for the franchisees and maintain tight quality control.
Wednesday, October 19, 2011
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