Turn your business into a franchise
If you have a successful business and are looking to expand, you might want to open additional outlets. Franchising your business can be a very effective way of doing this. Instead of financing and managing the new outlets yourself, you work with independent franchisees.
Business format franchising
With business format franchising, you put together a complete business package. You then licence this format to franchisees. They run their own businesses, but use your methods and trading name.
- You provide an operations manual, detailing how to set up and manage a new outlet. For more information, see the page in this guide on how to develop your business format.
- You agree a contract with your franchisee setting out what rights and obligations you each have. For example, you might provide marketing support. For more information, see the page in this guide on the franchise agreement.
- The franchisee pays you for the right to use your business concept. For more information, see the page in this guide on franchise fees and royalties.
- You train and support the franchisee through their start-up period. Support could include ongoing marketing, business growth help, regular regional meetings or how to negotiate purchasing contracts.
Other franchising arrangements
There are other business arrangements which are sometimes also referred to as franchising, including:
- selling a licence allowing someone else to manufacture and sell your product, but without telling them how to run their business
- using an agent, who sells your product on your behalf
- setting up a distribution agreement, whereby you sell your products to another business that then sells them to their own customers
This guide focuses on business format franchising. For more information on using agents and distributors, see our guide on how to reach your customers effectively or use our interactive tool to identify the sales channels most likely to benefit your business.
Subjects covered in this guide
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