Franchise concepts have prevailed across the industry in international competition. Whether in the hotel industry, the fast food industry, the car rental or the real estate industry: A large number of companies with a high market share enjoy great success thanks to franchising. Their distribution networks, consisting of independent franchisees, combine a unified offering, a concise brand message, and a cooperative, flexible structure that provides significant economic benefits to both the franchisor and the franchisee. In the following article, Engel & Völkers introduces the principle of franchising and describes why it is the best choice for startups.
Founding as a franchisee: your business, your freedom
In principle, as a license partner of a higher-level franchisor, you are the independent manager of your newly founded company despite brand loyalty. You have the option of freely disposing of the location of your branch, your staff and your internal work organization, such as working time arrangements, as long as you comply with the terms of the franchise agreement. There are no limits to the sales potential of your company on the market. The already well-known range of products as well as the established brand of the franchisor make it unnecessary to build up your own customer base. Even at the opening, you benefit from the market strength of the entire network, so that the turnover in the start-up phase compared to a conventional start-up is significantly greater. The royalties that are paid to the franchisor in return, usually take a much lower position, so that investing in a franchise operation becomes economically profitable even after a very short time.