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Franchisors

Franchisors

A franchise is a product or service marketing system, based on the close and continued collaboration between legally and financially independent companies: the franchisor and its franchise holders.

As the franchisor you can grant the franchise holder the right to run their business according to their own concept, already successfully tried and tested, within a set time period and area, receiving economic compensation in return.

The franchise holder is authorized to use the franchisor's trade name or product or service brand names, its know-how, technical and business methods, procedures, as well as other intellectual property rights, but they are obliged to manage the business in accordance with the concept developed by you, investing time, money and effort in order to "clone" this business in the area it is in.

The terms of this business collaboration are governed by a written franchise contract.

  • Advantages and services

     


    Advantages for the franchisor:

     

    • Increase in the business volume and the market share, with a relatively low investment. Contribution of resources by the franchisees
    • Faster expansion of the network
    • Obtaining of economy of scale derived from the supply to a chain in expansion
    • Lower volume of fixed expenditure (immovables, personnel, management, production, stock control, etc.) in comparison with a branch system
    • Absence of labour relations with the franchisees at the same time as this encourages them to be the owners of the business


    Disadvantages:

     

    • Selection costs, training and support, as well as need for capital for the pilot establishment
    • Limitation of own growth in the franchised areas
    • Hierarchal power over the franchisee is less with respect to employees than in the branch system, as the franchisee is the business owner. There is pressure by the franchisees to make changes, there is greater difficulty to prescind with those which are not satisfactory, etc.
    • The corporate profit margin per establishment is lower

  • Steps for franchising a business

    Feasibility Project


    • Analysis of the pros and cons of the franchise system and comparison with other growth options


    • Analysis of attitudes
      • Quality and professionalism in management
      • Predisposition to consider the franchise holders as partners in the business. 
      • Predisposition to accept the advice and opinions of specialized professionals, etc.
    • Analysis of the franchisability of the business
      • Existence of own know-how 
      • Ease of transfer to the franchise holder 
      • Arguments for involvement in the business (profitability, other advantages)
    • Market study
      • Products and services with solid and growing demand
    • Estimate of costs and necessary budget
      • Market studies, planning and development, professional services, marketing, selection, training, etc. 
      • The income from payments (canons) by the franchise holders must be realistic, with adequate compensation for both parties, franchisor and franchise holder
    • Creation of pilot establishment and results analysis

    A crucial condition for successfully creating a franchise network is to have a successful tried and tested business, that is well managed and capitalized, and capable of being "cloned"

    Project development

    • Preparation of the franchise package . It must include:
      • Proposal dossier or franchise dossier 
        • General information about the characteristics of the franchise 
        • Aimed at potentials franchise holder interested in the same.
    • Corporate identity regulations
      • Regulate the use of the brand name and its application in different formats (signs, leaflets, staff uniform, etc.). Important for maintaining a consistent company image
    • Decoration handbook
    • Operations and internal procedures handbook
      • Exhaustive information on the operation or running of the business (product, manufacture, sale, management, accounting, advertising, etc.). It is vital that it contains everything the franchise holder must know in order to manage the business. It is an important element for its success
    • Franchise contract with legal framework that regulates the relationships between the franchisor and its network of franchises. It must basically provide for:
      • rights and obligations of the franchisor and franchise holder 
      • products and services contributed by the franchisor 
      • economic compensation in the form of canons and liquidation conditions 
      • duration of the contract and conditions for renewal 
      • description of the territorial scope 
      • control systems by the franchisor aimed at the franchise holder. 
      • conditions under which the franchise holder can sell or transfer the business 
      • conditions for use of the brand name, signs, etc. 
      • causes for cancellation of the contract
    • Business plan: deciding on the most suitable financial structure for expansion


    • Creation of the necessary infrastructure to be able to build and manage the network:
      • Administrative and management network (franchise manager, support staff) 
      • Selection and training of franchise holders 
      • Technical and commercial support for the franchise holders. 
      • Search and selection of places to set up the points of sale 
      • Purchase and provision of initial stocks and teams for the establishments 
      • Registration in the Register of Franchisors with its headquarters at the Directorate General of Domestic Trade of the Ministry of Economic and Financial Affairs, prior authorization from the autonomous region corresponding to your registered office, as a precondition to operating as a franchisor

    The right choice of franchise holders and locations of the points of sale are vital in guaranteeing profitability and the continuation of the network.

    Marketing

    • Opening of first establishments :
      • Specific assistance for the franchise holders for starting up. 
      • Local promotion of each new point of sale
    • Advertising : continual promotion of the brand image
    • Research and development : continual improvement of the products and/or services to meet the market's level of demand

     

     

     

  • Bank Support

    If you are interested, at SabadellAtlántico we can offer you support in the franchising process of your business:

    Advice

    • On aspects relative to the expansion process
    • On the different modes of financing and on the most suitable way of financing of the project, analysing and adapting each case to individual needs
    • On professionals specialized in franchising: consultants, legal advisors, etc. SabadellAtlántico has agreements established in collaboration with some of the most prestigious businesses in the sector

     

    Financing

    • With the products, terms, interest rates and guarantees adapted to each specific project
    • From the launch and carrying out of the project to the obtaining of yield from the investment
    • From the expansion of the network by means of financing the investment to be carried out by the future franchisee for the opening of the business, as well as the financial products and services that your franchisees might need for the running of their future business
    • Providing of an interlocutor for carrying out the financial procedures of the new franchisees, as well as the centralized monitoring of the operations presented, with quick response and a knowledge of the brand which will permit homogeneous criteria when evaluating operations

     

    Support for internationalization

    SabadellAtlántico maintains a cooperation agreement with five of the leading European banks specialized in franchising.

     
    In this framework of cooperation, the banks integrating the agreement have put an extensive range of branch offices at the disposal of franchisors, together with a range of specific financial services for the franchising sector and the sources of financing that they need.
     

    Similarly, these banks contribute not only their financial experience in the world of franchising, but also a cultural knowledge needed for the adaptation of a business concept in a foreign country.


    Franchisors, Bancos
    • España:
      Banco Sabadell
    Business and Office Protection
    • Holanda:
      Abn Amro Bank
    Franquiciadores Banco de Holanda
    • Reino Unido:
      Natwest Bank
    Franquiciadores Banco de Reino Unido
    • Francia:
      Société Générale
    Franquiciadores Banco de Francia
    • Italia:
      Unicredito Italiano
    Franquiciadores Banco de Italia