According to data taken from the report “Franchising in Spain” (2021), prepared by the Spanish Association of Franchisors, there are a total of 1,381 franchises in our country. A figure that illustrates the importance of this system. In this post we are going to explain what it is, how it works and what its advantages and disadvantages are.
What is a franchise?
Franchising is a business model in which a natural or legal person offers the right to a third party to use its brand and work under its commercial system.
Therefore, franchising is a commercial relationship between two parties: the franchisor, that is, the company that grants the rights to market its brand and the franchisee , the entrepreneur or investor who acquires these rights.
How does it work?
The franchisor provides the entrepreneur with mexican whatsapp number several aspects: its know-how (knowledge necessary to carry out the activity), its experience in the business, as well as the recognition of its brand.
In order to successfully carry out a business relationship, a franchise usually requires, on the one hand, a renewable contract of about 5 years and, on the other, an entry fee. This fee is an initial investment that includes the different aspects of starting up the franchise mentioned above ( know-how , brand, etc.)
Sometimes, royalties (copyright) are added to these two obligations, which include exploitation rights, to pay periodically for the services provided, or advertising royalties .
Advantages of launching a franchise:
1. Reduce risks
The franchisee reduces the risks that entrepreneurship may entail when he allies himself with a brand that has proven and already developed success.
2. Training
Before starting their activity, the franchisee receives prior training and advice to prepare their premises.
3. Communication and marketing
The entrepreneur can take advantage of the communication and marketing tools already implemented in the franchise.
4. Belonging to a community
By being part of a franchisee network, the entrepreneur is not alone. He can ask other entrepreneurs about their experience and resolve his doubts about the business.