3. Make important decisions about your business model

While preparing legal paperwork, you will have to make many decisions about how you will operate as a franchisor. The key points are:

• Define the franchise fee and calculate the different royalties that you will collect from the franchisee.
• The terms of the franchise agreement.
• The size or territories of the exclusive zones for franchisees (provinces, neighbourhoods, etc.).
• Geographic area in which you are willing to grant.
• The model and duration of the initial training programs that will be offered to franchisees.
• The products and equipment that franchisees must acquire to start operating.
• The total investment and profile of the franchisees that you are looking for both economically and professionally.
• Franchise marketing strategy.

The decisions taken at the beginning regarding these and other elements will definitely affect the future of your franchise in both the short and medium and long term.

Let's give an example. The entrepreneur who starts in the franchise may think that the difference in the exploitation royalty between 4% and 5% is not very large. But within 5 years, when you have 100 franchises sold, the total volume can be hundreds of thousands of euros.

To know how to franchise, you must consider different economic scenarios of the franchise business model.

This will define the entry fee and the different royalties that you must collect. Also the number of years of duration of the franchise agreement that you end up signing with the franchisee.

Other aspects

Another fundamental aspect is to know the geographical conditions in which you will move. Its variability can affect the profitability of the franchisee and, of course, local laws in each locality or autonomous community.

Finally, improper training will surely generate incompetent franchisees to apply their franchise system successfully. Therefore, the maintenance of training resources for your franchisees will be essential.