Franchise Basics Explained

With approximately 48,000 franchise units currently operating in the UK, employing more than 710,000 staff, awareness of franchises has never been higher. But what exactly is a franchise?

What is a franchise?

A franchise is an authorisation granted by a company (the franchisor) to an individual or group (the franchisee) that enables them to carry out commercial activities, such as selling the franchisor's goods and services, under the franchisor's brand name.

How does a franchise work?

Once a company or individual has established a successful business with the potential to grow, they may choose to franchise it. This allows interested parties to invest in the franchise, become a franchisee and run their own business under the franchisor's brand name. Ongoing training, support and advice is provided by the franchisor, who also defines the rules and regulations by which the franchisee must operate.

Why do businesses offer a franchise?

Franchises offer numerous benefits to both the franchisor and franchisee. For business owners, becoming a franchisor allows them to let franchisees run their own business under their brand, allowing the franchise to expand quickly and more cost-effectively than if the franchisor was opening more outlets themselves.

For an investor looking to start their own company, becoming a franchisee enables them to run a business which already has an established blueprint for success and provides them with easy access to advice and support.

What is a franchise business model?

In a franchise business model, there is a legal and commercial relationship between the franchisor and the franchisee wherein the franchisee is permitted to use the franchisor's trade name and business systems.

In a franchise business model, the franchisee pays the franchisor for the rights to use their systems, trademarks and logos, sell their products and receive training. The franchisee must also agree to run the business in line with the franchisor's rules and restrictions as described in the franchise agreement.

To find out if Cafe2U's franchise business model could work for you, visit our franchise homepage here.