Franchise: How Does It Work?

Thinking about diving into the entrepreneurial adventure with a franchise? You might be wondering how to choose the right one, what it involves, and how it works. Right?

If you answered yes, we're here to shed some light on it! With this guide specially crafted to help you understand the ins and outs of how a franchise operates, you should have a clearer picture.

A Quick Reminder: What is a Franchise?

A franchise begins when there is a business agreement (in the form of a contract) between a franchisor and a franchisee. This agreement allows the franchisee to do several things, such as use the franchisor’s name (or brand), its internal processes, its products/services, and receive business support, among other things.

In exchange for these services/products and support, the franchisee is typically required to pay a percentage of sales. Additionally, they must adhere to the guidelines established by the franchisor.

Different Types of Franchises

Franchises can take various forms, but here are the most common ones in the market:

• Service Franchise: This allows a franchisee to use the techniques, image, and know-how of the franchisor to offer specific services. For example, a franchise for mechanical garages.
• Distribution Franchise: This enables a franchisee to use the brand and products of the franchisor in a retail context. The store adopts the name and brand image of the franchisor. For example, a franchise of clothing stores or fast-food restaurants.
• Production Franchise: This allows a franchisee to benefit from specific production techniques established by the franchisor. Without a retail outlet, this type of franchise focuses on the production chain. For example, an office chair manufacturing plant.

How a Franchise Works

The operation of a franchise can vary depending on the franchise model implemented. Here are the main factors that influence its operation:

• Duration of the contract;
• What is franchised (service, product, production method);
• Non-compete clauses;
• Training of staff;
• Financial obligations of the franchisee;
• Limits of exclusivity on the service, product, or production method, and on the brand image.

All these aspects are established in advance by the franchisor and confirmed with the franchisee when signing the contract.

The Many Benefits of Being a Franchisee

Being a franchisee involves certain obligations but also offers numerous advantages. Here are the main ones:

• You benefit from the franchisor’s brand image, products/services, and/or production techniques.
• It’s a quick (and reassuring) way to start a business.
• It helps ensure the longevity of your business. 90% of franchises are still in operation after 5 years (compared to 20% for non-franchised businesses).
• You receive regular training and support from the franchisor.
• You can launch a proven operational model, thus limiting the risk of major mistakes.
• You have a network of franchisees to discuss challenges and get advice.
• You achieve economies of scale: whether for marketing or supplier access, the fact that many things are managed at the franchisor level generally provides economies of scale for franchisees.
• With a proven franchise model, you can start your business faster.
• Financial assistance: some franchisors offer financial support in the form of loans, financing aid programs, or financial advice tailored to your situation.
• You also benefit from the research and development conducted by the franchisor.
• You receive regular marketing support from the franchisor.

Some Potential Drawbacks to Consider

• Initial Costs: Between franchise fees, royalties, training costs, and sometimes equipment, the initial investment can be significant.
• Dependence on the Franchisor: A franchised business cannot do EVERYTHING it wants. Certain rules and constraints limit autonomy and decision-making. Your business’s reputation is also closely tied to the franchisor and other franchisees.
• Royalties: Royalties must be paid to the franchisor, often as a percentage of sales (though this can vary depending on the franchise contract). Renewal fees may also be required by the franchisor at the end of the contract.
• Geographic Restrictions: Some franchise contracts limit your operations to a specific geographic area.

How to Acquire a Franchise

Wondering about the process of acquiring a franchise? Here are the main steps of a typical acquisition process:

1. Research and Evaluation

• Identify your goals, skills, and the type of project you want to invest in.
• Research available franchises in your area of interest.
• Once you find franchises, evaluate their reputation, profitability, and financial stability over time.

2. Contact and Meeting with Franchisors

• Communicate with the franchises you’re interested in and ask all your questions.
• Obtain documentation on the franchises.
• Once you have a clearer idea, arrange meetings with the franchisors.
• Learn more about the costs you’ll need to cover, the royalties, the support from the franchisors, and their expectations.

3. Feedback from Existing Franchisees

• Ask the franchises you’re interested in to meet some of their franchisees to learn more about their experiences and see how the concept works in a real-world setting.

4. Feasibility Study

• Conduct a thorough market study to assess the demand for the product or service in the targeted area.
• Evaluate local competition.

5. Budget/Financing

• Determine the investments required on your part and estimate the potential profitability of the franchise.
• Consider financing options from financial institutions if needed.

6. The Contract

• Once the project’s feasibility is validated, you can sign the franchise contract and provide the initial investment fees.

7. Training and Support

• Then, contact your franchisor to receive initial training on managing and setting up your franchise.

Why Not a Bien Chez Soi Franchise?

Now that you’re well-informed, we’re excited to invite you to explore the enriching opportunities of Bien Chez Soi’s home care franchises. Join us to make a positive difference in your community!

By launching a Bien Chez Soi franchise, you get:

• Regular coaching to ensure the smooth operation of your business;
• Business development support;
• Financial advice;
• Tools to ensure the satisfaction of your employees and clients;
• Performance metrics for housekeeping;
• Access to training programs approved by the Quebec Ministry of Education;
• And many other benefits.

Interested in launching your franchise in Quebec?

Why not do it with us? Discover the home care services you can offer and explore opportunities to create a successful business without delay.