A franchise is when you take a business name that is already in operation, you take their name to enable growth with someone else’s popularity. It is a lot easier than starting up your own business because you don’t have to advertise as much because the name is already well known.

Franchise Law

The law of franchise is the relationship that you have with the company that you are working for, you may be working for yourself but you also work for the company too. You must follow the rules of the company such as managerial approaches, uniforms and logos and means of advertisement. You must also comply with the standards of dealing with the public and complaints they may have, because you are not just representing yourself you are representing the company whos name you are using.

Every business will have a different percentage rate that you will pay them out of your profits this is known as a royalty fee.  Most of these royalty fees range between 10-20 % but some of  these can be more depending on the success of the business itself. If it is a better known company or a new business that is booming they can ask for more. After you have paid the royalty fee you get the rest of the profit and out of thie has to come the wages of the employees and the rent of the premises, insurances and taxes and stock before you get your share. Most companies or franchises use bridging loans to acquire stock to ensure the business has a sustainable amount of capital in case anything should happen, such as a refusal of loans, safety capital incase they cant meet the rent or going through tough times. The use of bridging loans is considered good practice in business, it shows the banks that you are able to pay them back even if your business is under a slight financial problem.

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Judging the location for your franchise is vital, you must pick an area that best suits the business itself, for example there is no point opening a sandwich shop in a quiet little country village it woul make more sense to move it into a business park or a busy town. The better the location the bigger the rent on the premises is going to be but you have to spend money to make money as they say.

Never go into business if you don’t know how the business ethic works. You must have managerial skills and you can do such courses in your local colleges, most of these colleges offer day and evening courses in business. You should also know about accounting too, this would save you money in the long run, instead of getting accountants to check over them during periods of the year, you can just hand them up once and they can send them in. This will also give you a better understanding of your businesses financing. These skills is what defines you as a business person and essential to your own success.

When Doing Business

When you are in business you will find that every town or city has a different code of business. Such codes range from the pricing aspect to how much advertising you can use and what size ads you are allowed. These all fall under the heading un competition clause, you will have to know the contents of this clause, they vary from city to city and town to town. For example you own a cafe and you want to use the sidewalk for a seated area during the day, you have to pay a charge and in this agreement you are told how much of the sidewalk you can use and in some cases for how long. This un competition clause is to protect other business in the area and yours. Another example would be the pricing of goods, you will be given a price range from the company on how much things are there is always a bit of wriggle room in these lists to suit the different business areas. The business area will have its own lists of what is recommended to suit the type of business you are setting up, there is a little wriggle room here too but a lot less from what you get from the company itself. You have to comply with these lists and come up with your own compromise. There are many of these issues in these clauses, be sure that you are well informed about these and you will find it a lot easier and quicker to start up business.

Location is everything in business but under the un competition clause you will be told that you can not be in close vasinity of a similar business. For example you have an Italian restaurant but the town already had an Italian restaurant you could find your self on the far side of town, if your restaurant was Chinese of Indian you could be a lot closer to the centre of towns, in some of these clauses you could move next door if you liked.

Insurance

You know that you need public insurance, employee insurance, and contents insurance. What you will have to do is sit down and go through these contracts yourself and know exactly what you are insured for and the employees rights but most importantly the public insurance. Public insurance companies vary but they are all out to protect the customer and rightfully so, in this agreement you will find that there are guidelines to follow some you would have known, some are obvious but most of them you wont know. The better knowledge you have of these the easier it will be for you to do business, it is also helpful when you are designing the shop structure, how far apart the tables have to be apart by law and such things. There are many and it will take time but is very beneficial.