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What is franchising?

Franchising is a form of business where an entrepreneur operates or starts his business according to a particular formula – the franchise formula – the use of which is granted to him by the franchisor. The franchisee has his own company, not a sub-office. He is legally and economically independent.

The Franchise Formula and the Benefits for the Franchisee

The franchise formula, as described in the BUSIOP Handbook, ensures uniformity. This provides a recognizable identity for the customer and uniformity for the entrepreneur. Using the franchise formula provides the entrepreneur with a much better chance to succeed than as an independent where he would have to build his business from the ground up, detail by detail. As a franchisee the entrepreneur has less freedom, but also doesn’t have to re-invent the wheel every time. The franchisor takes over various business development and planning tasks and offers ‘know how’ and guidance.

Benefits for the Franchisor

There are various benefits for the franchisor. Entrepreneurial owners are usually more motivated and active than branch managers. Thus, the franchisor can focus more on the development and support formula, with tasks such as purchasing, brand-building, promotion, training, events and pricing policies. There is a more favourable spread of the risk.

Hard and soft franchise

There is a difference between a ‘hard’ franchise and a ‘soft’ franchise. The difference is in the amount of freedom that the franchisee has in implementing the franchise formula. With a ‘hard’ franchise, the formula is described in detail. With a ‘soft’ franchise, things are less defined and there is more freedom. However, there are also more choices to be made by the franchisee than with a ‘hard’ franchise. Although BUSIOP is a ‘soft’ franchise, franchisees are guided and advised on every step as an entrepreneur.

Entering into the Franchise Agreement

With BUSIOP, the franchise agreement is for a period of 5 years during which time the franchisee can build his company with the help of the franchise system. At the end of the 5-year period, consulting together with the franchisor, it is decided whether to renew the franchise agreement for another 5-year period or whether the franchisee will end the activities or continue them in a different way.

Selection Procedure

BUSIOP utilizes a strict selection procedure for potential franchisees to select suitable, motivated candidates who will focus on establishing their own company, thus reducing the risk of failure. During the selection process, the personality, education and experience, leadership, vision, entrepreneurial qualities and financial situation of the potential franchisee is examined.

Costs

When you acquire a BUSIOP franchise, an entry fee is charged. The entry (initial franchise) fee is a compensation that the entrepreneur pays for the idea, the use of the brand, the use of the system, marketing, knowledge and initial training. Subsequently, the franchisee pays additional fees for royalties, brand promotion and the support that the franchisor supplies.