Franchising .. well, kind of..

[LukeB]

Hi All,

I am looking at expanding one of my businesses across the UK...

Need some help please!

we get tons of enquiries from people asking if they can start a supply/install business in their area using our product... in the past we have let people do this for free to get our name more popular..

We are now the most popular in what we do and when people want to supply/install in their area, we want to offer them a package...

i.e. £10-£15k will get them a certain territory, a pallet of stock, full training, all sales support etc...

they will not have to give us a % of sales or anything like that... all that happens is they buy stock at a preferential rate direct from us.. effectively a business without the ties of a franchise....

Can anyone see a flaw in my plan! open to as much scrutiny as possible please!

 

[i.m.]

I was wondering why you don't want to exert control via getting a %age? There obviously could be a danger that you send out an inconsistent serve/message about your product if different regions perform better than others and it is better to try and pin people down and the %age option often works.

Best

BR

 

[Moneyman]

So they give you £10k and get your stuff to sell until they find a cheaper supplier or find someone else who will also sell but they make a little markup.......
Sort of like a franchise for you without you getting the benefits of the franchise arrangement.
Yup i can see a flaw.

 

[Moneyman]

What you should do:
Go find a franchise that deals in a similar way to what you do but in another business area...copy

 

[KM-Tiger]

... in the past we have let people do this for free to get our name more popular..

And what you propose carries a risk of an unsuitable franchisees destroying that name. You really need to retain some sort of control over the franchisees.

It need not be onerous or a rip-off. I'm a franchisee and quite happy about it as I get a lot in return for the fees I pay.

 

[The Resolver]

Sounds like a territory based dealership. Similar to a franchise save they do not trade under your name and do not have to follow your business processes. Also they probably do not need any knowledge transfer from you as you would get in a franchise. It sounds like they know how to use your product. The fact that they do not pay a % does not itself not make it a franchise. I have just finished setting up a franchise including drafting the franchise agreement and this one also did not involve a % to the franchisor but a fixed monthly fee (service based).

Not sure why you should not bind them in some way, though. In fact, why not set this up as a franchise, You have then much more control and have a better return. If they are all so keen then maybe they will be prepared to commit.

PM me if you would like a general chat about this and which way to go. Main thing is don't be too casual about this. You look to be in a wonderful position, with people wanting to use your product in their business, so ensure you exploit it properly.

 

[Jon0_FZ6]

I can see how this could work if you find the right partners for your territories but it could go wrong as others have said if not.. all it takes is one bad apple.....

You could perhaps get them (not sure what other word to use if they're not franchisees- licensees?) to sign an exclusivity deal of some sort. Perhaps don't charge a percentage of sales but instead a flat license fee which entitles them to install/supply your product. But do you really want people out there installing your product without having some sort of control over how they do so- I mean besides simply training them? A fully designed franchise system gives you this control to a degree. If they don't follow system you could remove their rights.

Personally I can understand you not wanting to go the entire franchise route if you don't want the responsibility. If you do - you should do it correctly - franchisees expect a lot of support and very carefully worked out training and business system with full backup and it will take a lot of effort to set up correctly.

I'm thinking you probably don't want that hassle and want an easier way out. you could try it but you're running quite a risk. Get the right people in and perhaps you'll do fine.

any hints on what your product is? If you did set up the system you propose you can expect a lot of interest... sounds almost too good to be true!!