Do you want to find out how to open a franchise store? Below are the rules and benefits that can be obtained by creating or participating in an affiliate network.
Why open a franchise: advantages and opportunities?
For an entrepreneur who has a winning business idea and formula, creating a franchise network is ideal for expanding their business without investing too much capital.
Having a network of affiliates, in fact, allows you to incur considerably lower costs than creating a network of your own points of sale. In this way, it is possible to grow your turnover and expand your turnover without making risky investments.
On reflection, affiliates who are about to open a store franchise, will share with the company mother of goodwill and enjoy the constant care services as well as to take advantage of a well-established corporate image.
To better understand how franchising works, it is necessary, first of all, to know the figures who participate in the production process:
- the Franchisor (parent company) is the entrepreneur who has already consolidated a winning format with his business and wants to expand rapidly.
- the Franchisee (affiliate) is the entrepreneur who wants to launch himself on the market and open a new business but who, not wanting to start from scratch, prefers to take advantage of an already functioning commercial formula and be followed by the start-up of the business to the management of the point of sale.
Legal requirements for a franchise
The bureaucratic process to open a franchise shop has become much leaner. With the Besana law, in fact, many previously necessary limits and restrictions have been eliminated. You can check out a complete guide on how to open a shop in this article. Here are some of the basic requirements:
- Personal requirements: You must not have suffered previous bankruptcies or have been convicted of a criminal offense. In such cases, in fact, particularly preventive measures are used such as a ban on opening a commercial activity for 5 years;
- Opening a VAT number
- Certified Notification of Commencement of Business (SCIA): just send a communication stating that you have complied with all the rules laid down for the regulation of the business subject to the franchise;
- For those who intend to open a business for the sale of food, for example, the catering sector, attend the SAB course (Course for Food and Beverage Administration) and a HACCP course on hygiene and safety standards in the food sector.
How opening a franchise works
First steps for the parent company
The first fundamental step is the creation of a winning business formula, which is the cornerstone of the franchising project. It includes the know-how, the use of trademarks and distinctive signs (signs, drawings, etc.), as well as any technical and commercial assistance services that allow the franchisee to manage the business according to the standards of the parent company.
The Franchisor, in order to fine-tune its commercial formula, will have to carry out a series of activities that allow confirming the validity of the project itself. It will therefore have to carry out:
- sector analysis to measure the possible developments of the idea as well as the real situation of the market where it intends to expand
- draw up a complete business plan to assess the economic feasibility
- launch a pilot activity to ensure that the format works and is of commercial interest
It will also have to prepare its legal and organizational structure:
- trademark registration, to protect it from imitations
- prepare the franchise agreement to be proposed to future franchisees
- implement a wise marketing strategy
- prepare an organizational structure capable of coping with the growth of the network
With these elements, the aspiring franchisor will be able to organize himself adequately to launch himself on the market.
First steps for affiliates
Consequently, to open a franchisee, you must first carefully choose the right franchisor. Today the offer of franchising programs is very wide and ranges from the traditional clothing and catering trade to the e-commerce sector and online sales.
For this reason, it is important to understand what your personal and professional skills and propensities are, the type of business, and the earnings you intend to achieve. The final choice, in fact, will have to fall on the franchisor who satisfies these first points, as well as offering low entry costs and better profit margins.
It is also necessary to focus one’s attention on other important elements such as the years of activity of the franchisor, the number of affiliates, the reputation of the brand and make a careful analysis of the financial statements. These elements make it possible to identify a successful parent company, well-rooted in the market and with know-how on which to rely.
How much does it cost to open a franchise store?
In addition to developing the above elements, it is necessary to focus on the costs involved in opening a franchise store.
The initial investment may vary based on several factors:
- the commodity sector in which it will operate, each sector has its costs
- the costs (fee) of entry to access the affiliate program, which varies according to the importance of the parent company
- the costs of renting the premises, which vary according to the size and location
- the furnishing of the restaurant, respecting the franchisor’s format
- the first supply of material to be sold
- the staff to be hired
- the consulting legal and administrative
- The advertising and marketing
From this list you can see how opening a free franchise shop is generally not possible.
However, a franchise shop is often still worthwhile. Many of the costs can be shared with the parent company allowing for significant savings. For example, it is possible for the franchisor to participate in the creation of advertising campaigns, to take care of the furnishing of the premises and to send (included in the entrance fee) the first supply of the goods to be sold.
It may happen that some franchises do not require free entry and allow access to the program for free. This typically happens when a company is launching its franchise project and therefore wants to incentivize the enrollment of new franchisees.
Open an online franchise store
Opening an online franchise allows aspiring franchisees to launch themselves into the most varied economic sectors, in the face of often low investment. It is possible to range from the sale of goods in drop shipping to web agencies, from travel agencies to marketing companies.
The absence of the typical costs of a physical shop, such as the rent of the premises or the furniture, and lower start-up and management costs allow you to open a shop with very little expense. However, the advantages of franchising are not lost. An already tested turnkey format can be used, and continuous support and training can be obtained from the parent company.
Furthermore, in online franchising, the parent company can also deal with the design and creation of a dedicated website or e-commerce portal, depending on the services or goods involved in the activity.
Our documents to open a franchise
With LexDo.it, you can customize and immediately download all the documents necessary to open your franchise store by answering a few simple guided questions:
- Franchising Agreement (Commercial Affiliation): to join a network of affiliated points of sale
- Trademark Registration: to protect a trademark, logo or other distinctive sign at a national, European or international level
- Patent License Agreement: to use and/or exploit an invention for a fee
- Commercial Lease Agreement: to rent a property for commercial use
- Preliminary for Real Estate Sale: to sell a property to a buyer who undertakes to buy it within a deadline
- Letter of Intent: to define the current status of negotiation and regulate its continuation
- Deed of incorporation and bylaws sell: to set up a single-member limited liability company or with several partners
- Term Sheet for Investments: to determine the main points on which the future investment agreement will be based
You may also need the following contracts:
- Estimating Contract (sales account): to pay the price of the products only after having sold them to the end customer
- Periodic Supply of Goods: to regulate the supply of goods between suppliers and their customers
- Commercial Distribution Agreement: for the marketing of goods in a specific territory
- Temporary Shop Agreement: to regulate the lease of a retail space or shop for a short period
If you need to open a new VAT number to start a franchise store, we can help you with our ONLINE VAT NUMBER OPENING service.