What is a franchise business model

Franchising: the interaction between franchisor and franchisee

Franchising at a glance

Before we describe the franchise system using the bike example, let's start with the basics: In a franchise system, you as the founder have the opportunity to set up your own business with a business model that already exists. So you do not need your own idea, but take it over from a franchisor and become an entrepreneur with an existing idea. The business models of the franchisors, i.e. the organizations that offer franchising, have mostly already been tried and tested and established.

When you become a franchisee, you buy a license for your franchise business from the franchisee and for this fee you are allowed to implement the idea behind the franchise in a new location. So you open a new branch based on the franchise concept and become part of the franchise chain. All individual branches together bring the big "franchise wheel" into motion or drive it. In franchising, every founder operates legally independently with his company, but has to adhere very strictly to certain standards of the franchisor.

Are you still looking for a suitable franchise system? Take a look at our franchise exchange and find a suitable franchisor.

To the franchise exchange

Franchising: a give and take

The requirements of the franchisee are regulated in the franchise contract and differ from provider to provider. Often it is utility models and / or the design, marketing measures as well as suppliers and logistics network that are prescribed by the franchisee. He also ensures that corporate design and corporate behavior in the franchise are uniform between all entrepreneurs in his chain. In other words: both the furnishings and the offer as well as the advertising measures are similar across all branches. In some cases, there can also be minor deviations in franchising, but overall the creative leeway for you as the founder of your franchise company is rather limited.

That sounds like it's a disadvantage. But if you look at the big picture, it is useful and necessary in franchising to have clear guidelines for franchise companies so that the "franchise wheel" also rolls and is of course driven in the same direction. that they can benefit from the know-how and experience of the other franchisees and, of course, the franchisor. Learning effects are usually already in place and the initial hurdles that arise with every start-up are overcome in franchising.

If you are looking for a suitable franchise system, you will find the best franchise systems from the Franchise Top 10 initiative in this section.

To the top 10 franchises

Get started faster - with franchising

If the initial hurdles in franchising are overcome, that also means: get off to a quick start! As a franchisor, you can make use of property rights within your system from day one. These include, for example, brands, patents, trade names or copyrights. All of this costs a lot of time if you set up your own company, which you can save through franchising. In addition, you don't start from scratch with your franchise company in terms of image and awareness, but benefit from the existing reputation of the franchising name. If the franchise model has been successful with other founders, you as the founder with franchising have a certain certainty that your self-employment can be a complete success if implemented well.

You can also concentrate much more quickly on your core business when setting up a company through franchising. The search for suppliers and the creation of a marketing concept are no longer necessary. Your franchisor also takes care of quality management and the constant optimization or standardization of business processes.

Another advantage that you as a franchisee have in franchising is that your franchisor is obliged to advise you. You can take advantage of the advice on all topics, for example a location analysis, the creation of the business plan or the marketing concept for your franchise. If you have any questions about franchise financing, someone from the existing network will usually help you. In good franchising systems, training and further education are also included in the package.

The so-called territorial protection also provides security for your establishment with franchising. This assures you as the franchisee that only your own branch is located within a certain radius. This of course brings protection in-house, but you should still check the potential location for external competition before you move your franchise there.

Become a franchisor - with our instructions you can scale your business idea via franchising

Become a franchisor

One tooth in another to success with franchising

As already indicated, there are synergy effects between the individual members in every franchise chain. If many branches have a good image, less good branches can also benefit from this overall image. In addition, joint orders and processes reduce costs. But where there are advantages, there are also disadvantages. This is also the case with franchising:

If a member makes a mistake that is so serious that it affects the overall image, you too can feel negative consequences. You should therefore be aware that most customers do not see your franchise offshoot as your company, but rather see the entire system as ONE wheel. The basic prerequisite for your success in franchising is not only that you manage everything well, but that you also have capable partners throughout the entire chain. How well the wheel rolls in the end, a lot of small gears play a role. The performance depends on each individual member, but when all parts work well together, franchising can become a model for success.

If you are convinced of the interaction and a franchise is an option for you as a start-up concept, you can find out here how to become a franchisee. Consultation options and offers can be found in this article. And if you want to search directly for the right provider for franchising, we have presented top franchise systems for you here.

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.