Ask the expert: franchising, the economic way to grow business and brand

05/09/2016
OPINON. Q: I have a successful retail business, with two stores in Auckland. I don't have the capital to open new stores, but there's demand elsewhere in the country. An employee suggested I franchise, which sounds complicated. Where would I start and how do I maintain control of my brand?

A: It sounds like franchising would be a viable option to accelerate expansion of your retail concept across New Zealand (and potentially offshore).
Franchising is a tested business model in the retail sector globally. Many of our best known retail brands are franchised: Pita Pit, Stirling Sports, Robert Harris, NZ Post, Mr Minit and of course, McDonald's.
Franchising your retail concept is essentially you granting a franchisee the right to operate a copy of your retail outlet at a location for a set period of time.
The franchisee will be utilising your brand, know-how, operating systems and have access to the approved supply chain during the term of the franchise agreement.
As a franchisor, you will generate income from initial franchise fees (upfront fee and training costs) and an ongoing royalty that is based on a percentage of gross sales achieved by the franchisee.
In return, the franchisee will expect you to provide support and services such as training, marketing, product sourcing and development.
Franchisees will invest in setting up the retail outlet at an approved location and are independent business proprietors of the business.
This means they are responsible for their business operations, including the store build or fitout, stock, employees, tax and payments to the landlord and suppliers.
The franchisee receives their income from successfully operating the retail outlet under the brand name and in accordance with the system.
Expansion of your business through franchising is an economic way to grow your business and brand without the same level of pressure on your working capital.

Where to start? There is the initial upfront investment to move to a franchise model and most tasks should be outsourced, including:
- Business and accountancy advice to set franchise fees, ensure proof of concept and profitability for both the franchisor and franchisee;
- Legal advice with trade mark registrations, brand protection strategy, preparation of franchise agreement and review of related recruitment and marketing material;
- Consolidating existing operating systems and procedures to create induction training programs and manuals for franchisees;
- Documenting site selection criteria, supply chain, franchisee recruitment and franchise application process;
- Reviewing existing marketing strategy and local area marketing required to drive consumers to franchised businesses in new locations.

A well-managed franchise network will allow you to have the control that you desire to best protect your brand and reputation.
The first step is to ensure you can register trade marks with broad protection to include the store name, logo, tag-lines, loyalty club name and your own branded retail products or services.
The franchise agreement should contain the controls required to protect the brand, including use of trade marks and franchisor approval to use the marks in any advertising or promotion, and set restrictions on the franchisee's use of social media and rights to comment to media.
Consider any international expansion plans early on to ensure that trade mark protection can be obtained in key markets such as Australia, United States, United Kingdom, India and China.
International franchise grants to master franchisees or area developers provides an exciting model to grow your business globally. Burger Fuel is a great example of a New Zealand Company taking the brand global.
Katrina Hammon is an associate at Duncan Cotterill, specialising in retail and advises brands on network growth and global expansion.

Fonte:http://www.stuff.co.nz/business/small-business/83654322/Ask-the-expert-franchising-the-economic-way-to-grow-business-and-brand

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