What you’ll find in a typical franchise package

While franchise packages may vary, fundamental principles apply, David Paulson, senior franchise recruitment manager at TaxAssist Accountants, says

Most successful franchisees will tell you that their choice of franchisor was based on a broad mix of awareness of the brand and the strength of the business model.

Finding a match with their own skills, strengths and interests, they research extensively and, from my experience at TaxAssist Accountants, found connecting with established franchisees one of the most valuable parts of the decision making process. It means they get a real feel for what the franchise package delivers in practice and can draw on the experiences of a 200-strong national network.

But what are the fundamental principles enshrined in a franchise package? What should you expect from an ethical franchisor in return for the franchise fee? The first key point is that it should not be seen as a source of profit for the franchisor. In return for the franchise fee, the franchisor must provide a package to allow you to operate within the terms of the franchise agreement.

Although core principles hold true across many franchises, the package isn’t universal across all franchise systems. Business models differ hugely, with varying levels of training and support provided.

Use of trademark and brand
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Fundamental to being a franchisee is the right to trade as the brand of the franchisor you are joining. It is vital that the franchisor has registered its brand and that it has legally protected it to prevent someone else operating next to you using the same brand. You should seek confirmation that the franchisor does own the rights to the brand and that it has taken the necessary steps to protect it before signing the franchise agreement.

Sufficient training
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You will often see in franchisors’ advertising that previous experience or prior industry experience is not required, so you should expect sufficient training from the franchisor to be included as part of the package.

Typically, the initial training should cover three key areas:

* The business system/technical know-how in order to be able to provide the end product or service.

* Sales and marketing - no matter what you are buying into, marketing and selling your services will be essential.

* Running a business - this element can sometimes be overlooked, but as well as the know-how to provide the service and ability to market it, you will need to know how to manage your own business.

Training is often a mix of residential at the franchisor’s head office and locally within your territory. You should also expect ongoing training as and when required to cover new products/services, innovations within the business and in order to maintain sector knowledge. Questions to ask the franchisor should include:

* Is the cost of training covered by the franchise fee?

* Where is the training held?

* Are there any additional costs/out of pocket expenses I should expect - for instance, manuals, accommodation and meals/living expenses if the training is residential?

When you speak with existing franchisees, ask them about the quality of the training and if it was sufficient to operate the business successfully. It’s also worth looking at any awards received by the franchisor specifically for training provision - we’re Smith and Henderson’s current Best Training and Support provider, for example - and reading up on what criteria the judges used.

Operations manual
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The operations manual is your daily reference tool, which details everything you should need to know about running your business - from office and admin procedures, through to operational know-how. While franchisor support is unlikely to be available 24 hours a day, seven days a week, the operations manual is.

The franchise agreement sets out what your contractual obligations are. The operations manual, in conjunction with the training programme, details how to run the business model in line with your obligations. Operation manuals are increasingly available online, which has the added benefit of immediate updates as and when there is any change to the system or procedures to operate the business.

Prior to signing the agreement, we recommend you ask to view the manuals to satisfy yourself they are complete and go into sufficient detail. Be aware that you are likely to have to visit the franchisor’s office to view them due to the confidential nature of the information.

Marketing support
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Again, this will vary between systems, but you should expect some form of initial marketing support/business launch when you start. This could include:

* Initial supply of business leads to kick start your business.

* Creation of a local marketing plan, so that you are focused on your marketing activity from day one.

* Access to a bank of marketing literature, fliers and online advertisements for you to use locally.

* Initial supply of marketing literature and corporate merchandise.

* Stationery starter pack.

* Assistance with site selection if a premises-based business.

* Vehicle livery if a van/ vehicle-based business.

* Local PR services to raise your profile at launch and on an ongoing basis.

* Set up on relevant social media sites (and training on how to use them).

* Your own website to promote locally.

* Corporate clothing/uniform.

Less obvious is having someone to talk to when you’re thinking of new ideas to try locally. We encourage our franchisees to talk to us, as with our years of experience we know what works and what doesn’t.

Franchise territory, term and right to renew
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Depending on the nature of the system, the size of the business and the planned number of franchisees, the franchisor may or may not provide an exclusive territory.There are benefits to both - one gives you protection against having to compete with another franchisee or company owned outlet, while the other stops you from being restricted as to where you can market yourself. You should research the franchisor and speak with franchisees to see if territory is an issue.

You will have the right to operate for a set term, which could be from five to 20 years, depending on the franchisor.

While this isn’t strictly part of the package, you should still look at what term is being offered, what the renewal policy is and what your options are should you wish to leave or sell your business.

There will, of course, be other elements of the package, such as IT and software, equipment, centralised billing, electronic point of sale systems, initial supply of stock, shop fitting, deposit on a vehicle, national account clients, employment law packages, etc that are specific to the network, but the above constitute the fundamental core elements.

When doing your research, speak with existing franchisees and ask those that have recently joined if the franchise package was complete or if they experienced any unexpected out of pocket expenses during the training, for example, or were asked to make additional investments for items they thought would be included.

Remember, even in the same sector no two franchisors are the same. Careful research will tell you which offers the best value and most effective return on your investment.