Machines/Equipment, Franchise License Fee, Deposit & first months rent, full turnkey design/shopfitting and project management, lighting, opening stock, training and miscellaneous setup expenses, running capital.
Franchising is defined as an arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark and/or trade name as well as certain business systems and processes, to produce and market goods or service according to certain specifications. The franchisee usually pays a one-time franchise fee as well as a percentage of turnover as royalty or management services fee. For this the franchisee gains immediate name recognition, tried and tested products, standard building design and décor, detailed techniques for running and promoting the business, training of employees, and ongoing assistance in promoting and upgrading of the products.
While franchises are growing in popularity, the sad reality is that many people enter into franchise agreements thinking it’s a fool-proof plan for success, but the fact is that franchises still fail. The very essence of a franchise is consistency. If you’re not happy to follow someone else’s blueprint, you may be better suited to a different type of venture.
FASA has issued a publication entitled How to Evaluate a Franchise and franchisees are encouraged to refer to this publication. FASA will also assist a potential franchisee in evaluating a franchise opportunity.
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