The decision to acquire a franchise is very important. We are talking about a business model that can be very profitable, but, on the contrary, it can also end up being detrimental if it has not been properly planned. Therefore, we must study each case very well and understand whether it is worth embarking on a project of this magnitude. Keep reading this article where we will explain what it is, how you can acquire it and everything you need to know about franchises.

What is a franchise?

Franchising is a commercial relationship between two independent parties, The "trademark", by which one of them grants another the right to use its brand, its corporate image and its business model for a specific time and place, in exchange for an economic consideration.

The two parties to the franchise relationship are:

  • The franchisorThe owner of the brand and the business model.
  • The franchiseeThe person who has to pay a sum of money to acquire the rights to the trademark.

What are the advantages and disadvantages of the franchise model?

As with any business model, we must also analyse the advantages and disadvantages of franchising before embarking on a project of this magnitude. In this way, it is advisable to understand its strong points and those that may cause us some conflict, in order to be able to take the decision of consciously acquire a franchise.

Advantages:

  • You start working with an established company whose brand already has market relevance, and a business model that has proven to be profitable.
  • You get technical assistance and training from the franchisor.
  • You minimise the risks involved in starting a new and unknown business.

Disadvantages:

  • A financial consideration must be paid, consisting of an entry fee and periodic royalty payments, which are usually a percentage of the profits obtained.
  • You are not the owner of the brand, so you cannot have absolute control over it and are dependent on the strategic decisions of the franchisor.

How can I acquire a franchise?

Entering into a franchise requires a number of steps to be taken and having planning in place before you carry out your project. It is therefore advisable to carry out the acquisition process in the most logical way:

  1. Define the type of franchise. Decide which franchise model offers you the best option and the possibility of success over time.
  2. Find a suitable venue. Find the right place to develop your franchise activity.
  3. Find a franchisor. Try to find a well-established franchise with a profitable business model that is able to provide you with all the help you need when you need it.
  4. Get the necessary funding. Once you have found the franchise model and the franchisor, it is time to find the money you need to invest. It is an expense that can be variable and depends on the type of franchise, so you will have to assess the capital you have available and the prospects of future profitability.

At Martínez-Sanz Lawyers we are specialists in Commercial and corporate law. If you are thinking of acquiring a franchise and need advice, do not hesitate in contact us at.