07Dec

Definition of a Franchise

Franchising is a business relationship where a franchisor (a company or individual who owns the franchise system) grants a license to a franchisee (a company or person who contracts to use the franchise system) the right to use the franchisors brand and operating system for an initial fee (initial franchise fee). In return, the franchisee provides a share of the income back to the franchisor (a royalty). The license is contractual and is usually for a fixed period of time. The franchisor selects candidates to become strategic partners in implementing the business plan and selling products and services to the franchisor’s customers using the proven franchisor’s business model and/or their proprietary products. A franchise model has in place policies and procedures so as to create consistency from one franchise location to the other. As a growth strategy, it provides franchisors the ability to gain market share by increasing their points of distribution. Increased point of distribution results in greater exposure and brand awareness. Franchisors are able to grow and have committed individuals operating and driving the location. From a franchisee’s perspective, it allows the franchisee to get into business with support, a brand name, and a proven business model. This helps to reduce the risks involved with getting into the business. It has become a part of almost every industry. Although people most often think of fast food when they think of franchising, it is also found in retail, service, automotive, business services, real estate, and lodging. There are several things that one must understand about a franchise. You are not buying the franchise. Instead, you are acquiring a license to operate a franchise. You do not own the name, but instead, have a license to use the name. You do not own the business model, but instead, have the right to use the business model for a period of time. It is a little like being a tenant and renting. You don’t own the space you are renting, but instead, have the use of the space for a period of time. Uniformity is a fundamental principle to the success of a franchise. There must be consistency from franchise to franchise within a given business. By having the same product in similar outlets, with consistent levels of service, the franchise is able to build confidence in the mind of the customer and this drives people to the brand. Customers gravitate to what they know, what is familiar, and what they trust. The uniformity is created through operating standards and procedures that are clearly documented in operation manuals. Franchisees are required to follow an operating system and use the same suppliers of products, taking the same training. The system, suppliers, and training are all designed to create a consistent experience for the end user of the product or service and thus create an expectation and impression in the mind of the customer. The uniformity is enforced through a franchise license. This license gives you the right to use the brand and operating system. The license also comes with obligations, to follow the operating standards and systems, as clearly defined in the business model. If you fail to follow the standards, you may lose your license. With compliance to the system drives the market and enhances your investment. When you first look at a franchise agreement you may find it controlling and very one-sided in favor of the franchisor. This is normal and required to allow the franchisor to control the integrity of the brand. As a franchisee, you must understand that you simply can’t do what you want. You are required to conform. The success of the system as a whole to build a brand is dependent upon consistency. Although you can’t simply do what you want, strong franchise organizations value franchisees’ input and create advisory groups to provide feedback and input to the franchisor to assist in the strategic direction of the company. They view the franchisee and franchisor relationship as a partnership. A partnership in a strategic sense, not a legal sense. In franchising, it is not an equal partnership. The franchisor takes input but ultimately the franchisor has the final say. The franchisor acts as the senior partner in the strategic partnership. Franchisees are on the front lines and have strong knowledge of the needs of the customer. At McDonald’s, it was the franchisee’s input that led to the development of the Egg McMuffin and the McFish sandwich. Strong franchisors listen and value input from franchisees. Franchising provides numerous benefits. Benefits often include;

Becoming a part of an established brand
Proven business model
Mass purchasing power
Cooperative advertising
Operational support
Training
Ongoing research and development
Test marketing of new products and services
Easier access to financing
Access to high-profile locations

Hallmarks of a strong franchise include;

Strong leadership
Participative management with Franchise Advisory Councils
Continuous training
Evolving brand development
Continuous improvement to the operating system
Great communication
A positive corporate culture

General Information on Franchise Fees

Franchise fees are typically paid for the use of the brand and the operating system. There is usually a one-time initial franchise fee as well as an ongoing fee, called a royalty. The ongoing royalty may be a flat monthly or weekly fee or, more often is a percentage of the gross sales from the business. In addition, most franchise companies charge a fee for an advertising fund where the advertising dollars of the franchisees are pooled together to allow for franchisees to share the costs of national or regional advertising. By pooling the ad dollars together they are able to afford to advertise that would not have been affordable otherwise.

Why do some have franchise fees and others do not?

The initial franchise fee will vary from $5,000 to $75,000. How much the initial fee is varies depending upon the amount of training and support that is provided to get the new franchised location up and running. In addition to the initial training and support, the initial franchise fee covers the cost of franchisee recruiting, territory analysis, site identification, grand opening launch, and some recovery of the franchise development costs. Typically the more established and recognized the brand of the franchisor the higher the initial fee.

On-going royalty fees will vary from 0% to 20% of gross sales. The amount will vary depending on the level of ongoing support and services that are provided by the franchisors. For example, some franchisors may provide a centralized call center with order taking. This requires a higher cost which is addressed with a higher royalty. Where no royalty is charged, it is basically built into product sales or the sale of services in the form of markup or rebates on products. Typically, the more involved the franchisor is on-going with the business operations, the higher the fee.

Franchisors must make some form of revenue and profit in order to provide ongoing support and services. A royalty ensures that the franchisor has a vested interest in seeing you be successful for your success results in their success.

sources: https://franchisespecialists.com/

18Oct

What is a Franchise?

Key Element

• A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system.

• The franchisor is the business that issue licenses to franchisees.

• The Franchise law requires franchisors to disclose key operating knowledge to prospective franchisees.

• Ongoing royalties paid to franchisors vary by industry and can range between 5% and 12% or more.

Understanding Franchises

When a business wants to accelerate its market share or geographical reach at an economical, it may franchise its product, services, and brand name.

• Franchisor: Develops the brand and business system. They grant investors the license to open a new location in the brand’s name and use their intellectual property.

• Franchisee: Purchases the rights to use the franchisor’s name and business system to operate a business. This new business typically pays a percentage of its revenue to the franchisor, called a royalty.

Franchises are a popular way for entrepreneurs to start a business, one big advantage to purchasing a franchise is you have access to an established company’s brand name. You won’t need to spend resources getting your name and services out to customers.

Franchise Essential and Regulations

Franchise contracts are complex and vary for each franchisor. While from the public’s vantage point, franchises look like any other chain of branded businesses, they are very different. In a franchise system, the owner of the brand does not manage and operate the locations that serve consumers their products and services on a day-to-day basis. Serving the customer is the role and responsibility of the franchisee. Franchising is a contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to customers.

Typically, a franchise agreement includes three categories of payment to the franchisor. First, the franchisee must purchase the controlled rights, or trademark, from the franchisor in the form of an upfront fee (Franchise fee). Second, the franchisor often receives payment for providing training, equipment, or business advisory services. Finally, the franchisor receives ongoing royalties or a percentage of the operation’s sales.

A franchise contract is temporary, akin to a lease or rental of a business. It does not signify business ownership by the franchisee. Depending on the contract, franchise agreements typically last between five and 30 years, with serious penalties if a franchisee violates or prematurely terminates the contract.

Franchise’s Law in Canada & USA

In Canada, franchises are regulated at the provincial level. If you are entitled to receive this disclosure document pursuant to applicable laws of the provinces of Ontario, Alberta, Prince Edward Island, New Brunswick, Manitoba or British Columbia (the “Disclosure Provinces”), then this disclosure document has been provided to you pursuant to the Ontario Arthur Wishart Act (Franchise Disclosure), 2000, the Alberta Franchises Act, the Prince Edward Island Franchises Act, the New Brunswick Franchises Act, Manitoba’s The Franchises Act or the British Columbia Franchises Act (the “Acts”), respectively. If you reside in a province other than the Disclosure Provinces, or if you reside in a Disclosure Province but are subject to an applicable exemption or exclusion under the Acts from the entitlement to receive a disclosure document, then we have provided this disclosure document to you for informational purposes only, and on a voluntary basis.

Please note that the information in the disclosure document has been prepared pursuant to the laws of the Disclosure Provinces for distribution to prospective franchisees in those provinces to who we are required to provide it pursuant to the Acts. Accordingly, some of the information contained in the disclosure document is specific to prospective franchisees in one or more of the Disclosure Provinces only and, as a result, may not be correct for you or applicable to the operation of a franchise in your area. You are encouraged to make your own investigations to ensure the accuracy of the information. Further, if you reside outside of the Disclosure Provinces or if you reside in a Disclosure Province but are subject to an applicable exemption or exclusion under the Acts from the entitlement to receive a disclosure document, then we are providing the disclosure document to you on the understanding that you will not be relying in any way on the information OR documents contained in the disclosure document, and you do not have statutory rights of rescission or otherwise under the Acts.

In the U.S., franchises are regulated at the state level. However, the Federal Trade Commission (FTC) established one federal regulation in 1979. The Franchise Rule is a legal disclosure a franchisor must give to prospective buyers. The franchisor must fully disclose any risks, benefits, or limits to a franchise investment. This information covers fees and expenses, litigation history, approved business vendors or suppliers, estimated financial performance expectations, and other key details. This disclosure requirement was previously known as the Uniform Franchise Offering Circular before it was renamed the Franchise Disclosure Document in 2007.

To be continue...

03Oct

Studenttime Staffing Solutions’ Mission

Studenttimes Staffing Solutions’ mission is to promote economic growth and stability by delivering and coordinating workforce services to include; policy development, job placement services. In order for us to accomplish our mission, we will improve our processes embrace innovative solutions and technologies so we can continually grow our organization by developing a strong partnership with our stakeholders.

Our vision

We are committed to provide quality service by matching job ready workers with local employers through unshakeable dedication and unwavering devotion.

Our values

Honesty in our word and action
Conduct fairly and with integrity
Develop trustworthy relationship
Deliver on commitments as promised
Take initiative, with a clear business purpose in mind
Pursue work with energy, drive, and a need for completion
Adapt to vary work situation by being flexible and innovation in resolving issues
Be accountable for work, actions and behaviors in order to attain business results
Consider safety and security in all actions and decisions
Account for and protect physical assets and property
Work as a team
Develop mutual trust between employees and employers
Communicate openly, directly, frequently and tactfully
Encourage sharing of ideas
Continually work and develop as individuals, as teams and as an organization
Commit a continual learning to promote the development of transferable job skills