Franchising is an easy and safe way to set up a business. You can start with a well-tried concept and receive a compensation for your work. You are also able to use a well-known brand, the benefits of a chain membership and the support provided by the franchisor. Before setting up a franchisee, find out about the chain and the franchise package that it offers.
Franchising is a form of business in which you are able use a ready-made and well-tried business concept. The concept includes the products, operating practices, a brand and a corporate image. The know-how and trademarks of the franchisor and the benefits of cooperation are also available to you. You pay a compensation to the franchisor for the use of the concept, the chain membership and the benefits that you receive.
At the beginning of your operation, the franchisor will organise training and familiarise you with the concept. The franchisor will also be responsible for the required further training. Your company must observe the instructions and quality requirements provided by the franchisor. The franchisor will help you to find and equip the premises and in the setting up of the business and in other practical matters. It will also guide and support you on a continuous basis in such matters as marketing and technical issues.
A franchise chain usually comprises a large number of companies. As a franchisee, you also cooperate with the other entrepreneurs in the chain.
Setting up your franchisee business and acquiring the necessary funding is your task. You are also responsible for your own obligations and for all your business risks.
Franchising is an easy and safe way to start a business. You do not need a business idea and business experience is not a requirement either. Often the willingness to become an entrepreneur is enough.
With a ready-made concept, your business gets off to a quick start and you do not need to build it from scratch. Franchising also means lower business risks and start-up costs because the successful concept already exists. Furthermore, a well-known brand usually attracts paying customers from the start.
Running the business itself may also be less expensive than in ordinary entrepreneurship. In a chain, many of the functions are centrally managed, which means that you spend less on marketing and purchases. You will also have more time for sales work because the franchisor does much of the background work.
When running an ordinary business, you are often on your own whereas as a franchisee, you can always turn to the franchisor and other entrepreneurs in the chain for support.
Before starting a franchisee business, select an interesting sector and familiarise yourself with its operations. Check whether it is a growth business or on the decline. Think about your own chances of success in the sector.
If the sector looks promising, contact the Finnish Franchising Association to find out more about the chains operating in the business. Pick the chains that are in accordance with your values and criteria. Decide whether you meet the chains’ requirements for professional skills and personality.
After you have found the right chain, take a careful look at its franchise package. Check what the concept includes, what are its competitive benefits and how it is developed. Also find out about the division of work between the franchisor and a franchisee and the support provided by the franchisor. Also check that the franchisor’s operations and its franchising agreement are in accordance with the Code of Ethics of the Finnish Franchising Association. Go to the website of the Finnish Franchising Association to read its Code of Ethics (the document is in Finnish).
Also find out about the costs of being a chain member. You will have to spend money on start-up investments, franchise fee and a cooperation fee which depends on your turnover.
After you have found a chain with an attractive franchise package, you can send your application. You can send a franchisee application to more than one chain in the same way as you apply for a job.
To find franchise vacancies, visit the chains’ own websites, TE Services’ websites and websites listing franchise vacancies. You can also contact franchisors directly to ask whether you could become a chain member.
The application process often starts with the completion of the application form. The actual familiarisation process starts after that. You will be provided with more information about the chain’s background, ownership, key persons and business operating model. You may also have to work in the chain on a trial basis, take aptitude or personality tests or undergo a medical examination.
The application process has several stages and it usually takes weeks, even months. Before the franchise agreement is signed, both parties must become convinced that a long-term partnership is in mutual interest.
Contact the Finnish Franchising Association for information and help in franchising matters.
You can also contact experts specialising in franchising that are familiar with the franchisors and chains operating in Finland. They know more about such matters as concept assessments, finding out about the chains, calculations and agreements.
There are also information events where you can learn more about franchising in general or from the perspective of a specific chain. Training companies also arrange franchising courses and seminars.
If your need general advice on starting a business, contact the Enterprise Finland telephone service or your regional business development company.
Depending on the sector, franchise start-up costs vary between thousands of euros and hundreds of thousands of euros. You can also apply for a loan from banks or other financial institutions. If your company lacks the guarantees required by a bank, Finnvera’s partial guarantee (a guarantee that the bank can apply for your from Finnvera) can be a solution for arranging the financing.