The term 'franchising' is used to describe many different forms of business relationships, including joint ventures.
The more popular use of the term has arisen from the development of what is called 'business format franchising'. Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trade mark / trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.
Most franchisees in Ireland are an optometrist / sales person team.
Advantages of franchising:
- You don't have to come up with a new idea - someone else has had it and tested it too;
- You don't need to have experience. The franchisors will offer training in sales and business skills;
- Franchise operations will often have national advertising TV campaigns to promote their brand;
- Franchisors will help secure funding for your investment;
- Patients will also believe that you will be offering value for money.
Who is in control?
Each practice is owned and operated by the franchisee. However, the franchisor will retain firm control over the way in which you operate and sell products. You will have little or no freedom to run the practice outside of a ridid franchise formula.
What are the cost implications?
You will pay an initial fee to the franchisor, at the outset, together with on-going management service fees. You will need to buy products and services from the franchisor and you will probably have to sell the franchise back to the franchisor when its time for you to sell. However, you are unlikely to receive the open market value for the business that you have developed. In return the franchisor has an obligation to support the franchisee with training, advertising, promotional activities and with a range of management services.