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FRANCHISE 2017-05-21T15:59:38+00:00

THE FRANCHISE SYSTEM

The Franchise system constitutes a contemporary and effective tool of the development of the Human’s entrepreneurship. The foundation of this system consists of the cooperative relationship between the parties of a Contract. The first party (Franchisee) pays remuneration to the second (Franchisor), on order to acquire the royalty to sell products or services, by using a company name or a trade mark that the Franchisor has developed and established. The second party (Franchisor) supplies the Franchisee with a complete Operation and Administration Support System, in order for the business of the first party to operate successfully.

In a collaboration based on Franchising, it is important for anyone to distinguish the Franchisees from the Franchisors. 

Franchisors: Are the businesses which offer their company name as well as the administration systems (methods for the correct operation of the business). They are mainly composed by successful entrepreneurs who convert their business to a Franchise network, in order to spread their market share and develop, without necessary increasing staff or spending all their capitals.

Franchisees: Are individuals who agree to the idea to invest on a Franchise, which they will manage according to the clauses of the Franchise contract. The Franchisees pay the Franchisors for the royalty to use the company name as well as the management systems (for a specific time period). The Franchisees receive primary training as well as continuous support.  

The Franchise system offers advantages to both parties. The Franchisor expands his business, without the necessity to accumulate large capitals for the purchase and construction of new establishments, the acquirement of new equipment or the conduct of advertising campaigns. 

Equally important is the encumbrance of the existing personnel by the effort in developing new selling points and the hiring of new staff for the operation of these new selling points. 

Also a significant benefit will appear by the enthusiasm and business skills of the individual entrepreneurs who will become Franchisees and will provide activeness, vividness and fresh ideas to the overall system.

In the case of international expansion of the Franchisor’s operations, the good knowledge of the local market, competition, preference of the local consumers and State Legislation, becomes a significant advantage coming from the local Franchisee, to his collaboration with the Franchisor. 

Regarding the Franchisee, the benefits are equally important. Firstly he acquires the necessary organizing and management experience of a company that he wishes to develop, without the long term and specialization studies. He acquires knowledge and expertise which probably couldn’t provide for himself (for example, marketing, sales, human resources management), and he will be provided with a complete system for solving and managing crisis. The chances of success of the Franchisee’s business are much larger, since due to the Franchisor’s assistance, the location choice will be the most appropriate, the staff training will be more relaxed and quicker, the supply of ready meals will reduce the service time, the tested and ready to work maintenance program of the equipment will significantly minimize the lossed due to malfunctioning etc. Last the Franchisee will be able to benefit from the research and development (R&D) performed by the Franchisor providing the results directly available to him.

SUCCESFUL FRANCHISE SYSTEMS IN CATERING SERVICES

Catering is internationally recognized, as the branch with a continuous increasing demand in Franchise systems. Both the Franchisor and the Franchisees should be aware of those facts which highlight a successful Franchise system in the catering branch.

The suitable Business model, meaning the way that the chain differentiates its 

Value proposal in relation to the competition. The proposal should consist of a clear, recognizable, distinct experience including a balanced quality-price relation, based on strong foundations and efficient operational functions. 

The overall proposal should also function as a Brand, in order to create a distinctive category, benchmark, towards the addressed market.

In order to achieve Economies of scales for the system to be competitive on cost levels, strong purchasing power regarding the raw materials should be applied as well as the collateral securing of the critical mass, standardizing production.

The cost for the Franchisees is a critical factor not only regarding their profitability,  but also for their continuation in the network.

The Fundamental measures, the gross profitability and the relation between fixed and variable expenses. The model should have adjustment speed regarding the continuous changes of the competitive field, and flexibility regarding the fluctuation on the demands and the fragmentation of the market

The development strategy. The choice of the location, the adaptability in the local market, but also the model utilization, such as the multi-unit and multi-brand Franchise.

Testing points regarding the Franchisees

The adequacy of the Franchisee is vitally necessary regarding the success of a Franchise system. The choice procedure of a Franchisee is a very significant stage regarding the successful foundation of a Franchise and network development.

Proper planning and careful steps are essential before the final agreement. 

The choice of the appropriate Franchisee should be a “conscious choice”. 

A choice based on the correct criteria and where both sides are ready to accept their role, their obligations, and even to share their part of the business risks attributed. In other words they must comprehend and fully accept all the critical components of the endeavor. 

Like the candidate Franchisee ought to participate in the procedures before his potential “choice”, so does the Franchisor ought to adopt the appropriate procedures and provide the necessary information, in order to ensure that the Franchisee knows and understands all the parameters of the concept and of the business proposal.

The crucial Testing Points regarding the adequacy of a Franchisee are:

Necessary Skills

Does the potential investor in order to become our Franchisee have the necessary skills, abilities and experience demanded to efficiently manage his own business?  

Does he possess the appropriate behavioral characteristics in order to approach our Network’s demands? For example, a concept demanding sales skills cannot be supported by someone who lacks sales experience. Therefore a skill testing system should be developed for each potential investor addressing our network.

Comprehension of the collaboration terms

Many Franchisees believe that it will not be necessary to put in effort and labor regarding the success and the smooth operation of their business belonging to our network. That is incorrect, since it is obvious that more work and personal engagement than ever, is demanded in one’s own business even while it belongs to a proven network. The Franchisee ought to be dedicated to the daily functions of the business, especially in the beginning, until all the proceedings develop a rhythm, and until a efficiently prepared team, in charge of the daily necessary proceedings is established. This outcome demands time and resources and most of all commitment.

SUCCESFUL FRANCHISE SYSTEMS IN CATERING SERVICES

 Available Capital

It is important that the Franchisee possesses the necessary capital before he requests his accession to our network. The available working capital should be able to cover the original investment, the resources needed until the break-even point and the acquisition of positive cash lows for at least three periods. 

Achieving profits is not enough! The positive cash flow is a critical fact in the the ability to cover needs like purchasing merchandise in order to increase sales or the renewal of the product variation etc.  

A decision based on “what I want” and “what I can”

People’s choices often depend on sentiment and preferences. Many Franchisees decide to enter a network operating in a certain field, because of personal attachments or recreation involvement (e.g. sports equipment, music instruments etc.), or in the present occasion people choosing this concept by simply liking food.

We ought to examine the matter rationally. Maybe the applicant Franchisee can sufficiently manage a restaurant. The “what I want” might be an important starting point but it is crucial that our skills, the available resources, the balance of the personal life and business activities, the consent and support of our own people, the branch and of course the market, the competition, the available locations and many other facts, should be taken under serious consideration before making any moves…  

Location choice 

The known reply of the Marketing specialist’s answer to the question, which is the success triad of a franchise network, is “Location-Location-Location”. The location choice of every establishment in the network should be based on four (4) facts:

Pedestrian and vehicle circulation 
Visibility  
Convenience
Leasing contract

Services provided by the Franchisor ‘LOUKOUMI’

By using the Master Franchise method, the Franchisor undertakes contribution by offering a range of provided services, necessary for the facilitation, support and empowerment of the Franchise within the development frame.

Those actions are recorder as followed:

The authorization of the Franchising rights

The development of a complete menu, with the unique characteristics of the national Greek cuisine.

Readjustments and improvements of the menu regarding the consuming needs of the Danish people, if and as long it is decided by the Franchisor as necessary for the viability of the venture.

The provision of 53 different kinds of meat and meat products and the continuous research and development of an innovative nature regarding the specific product.

The provision and update of all manuals.

Primary training on the know-how of the proper organization and operation of the first Franchise establishment. In more detail on the subjects:

MarketingTraining: the staff will be trained on promoting matters of the meat dishes, and the advantages of the M.F. against others.

ProccessTraining: Training on preparation and serving the dishes will be provided, focusing on the accuracy of the orders, the quality of the dishes and the service speed.

General BusinessTraining: The staff of M.F. will be trained on General Management tasks and administration systems (accounting, record keeping, stocking, the use of suitable software etc.)

Continuous support in the form of training seminars on matters referring to improvements and changes.

The formation of the new shop and the acquisition of new equipment.

The development of the marketing program

The continuous coverage in product needs 

The research and development of new products 

The Principle of equal treatment to all franchisees

The overall of these individual provisions, as well as the individual analyzed references are recorded in detail in the signed contract, fully covering the rights and liabilities of the Franchisor’s company.