You’ve been thinking about starting your own business for a while, but haven’t found a unique concept. You’re hesitant to build a company from scratch and want to minimize risks. A franchise could be the right option for you. But which one should you choose?

Franchising is a growing trend worldwide, and Belgium is no exception. Popular brands like McDonald’s, Domino’s Pizza, supermarket chains like Carrefour Express, and hair salons like Frank Provost are examples of well-known franchises. Franchising has expanded into many sectors including real estate, retail, and cleaning services, offering many options.

What is a Franchise?

A franchise is a partnership between two independent parties:

The franchisee: You, the independent business owner.

The franchisor: The owner of the franchise concept.

The franchisee pays a fee to the franchisor to use their concept, brand, or service. In return, the franchisor provides ongoing support and allows the use of their logo, brand name, and more. A franchise is based on three key elements: the transfer of know-how, support, and brand use.

It’s important to note that a franchise is not a subsidiary. Subsidiaries are fully owned by the parent company, while franchisees operate as independent business owners.

Benefits of a Franchise

Starting a franchise can be less risky because:

– You remain independent and are your own boss.

– You can offer a proven line of products or services right away.

– You don’t have to build a supplier network from scratch.

– Customers already know the brand, so you save on expensive marketing efforts.

– Many tasks such as market studies, purchasing, and advertising are handled by the
  franchisor, giving you more time to focus on your customers and local marketing.

– You benefit from economies of scale, which means you can purchase products at a lower 

  cost and earn more profit.

– Financial risks are reduced because franchise investments are usually well-planned.

– You are part of a network of franchisees who can share new ideas.

– Franchisors provide management tools, training, and support to help ensure your success.

– Securing loans for a franchise is often easier.

Challenges and Risks

However, being a franchisee has its challenges:

– Success in one area doesn’t guarantee success in another.

– You assume financial responsibility, including for rent, investments, and fees.

– You have less independence because the franchisor sets many rules, including product offerings, pricing, and store layout.

Types of Franchises

Franchises can vary in how much freedom the franchisee has. They typically fall into two categories: “hard” or “soft” franchising.

Hard franchising: The franchisor controls almost all aspects of the business, including branding, inventory, and advertising. This model is common with large chains, allowing you to focus on customers and staff.

Soft franchising: You have more flexibility with this model, but also more responsibility for aspects like purchasing and advertising. You share the brand and logo but operate more independently.

Costs

The costs of starting a franchise depend on the type of franchise and the support provided. Common fees include:

Entry fee: A one-time fee paid at the beginning to cover the franchisor’s costs for developing the concept and recruiting franchisees.

Franchise royalties: Ongoing fees, often a percentage of your revenue or a fixed monthly amount, for the franchisor’s support.

Marketing fees: Sometimes included in the royalties, or charged separately to cover advertising costs.

In addition to these fees, you’ll need to budget for leasing a space, inventory, insurance, and staff.

Tips for Prospective Franchisees

Evaluate your qualifications: Running a franchise means being an entrepreneur. Do you have experience managing people? Are you comfortable relying on another party’s management system?

Choose the right concept: What industry excites you? Explore franchise options in that field. Consider industries with less competition and more opportunities for growth.

Plan your finances: Understand your financial position and create a business plan. Can you afford the investment, or will you need a loan?

Research multiple franchises: Request information from several franchisors and compare them. Attend franchise information sessions, and read reviews from other franchisees.

Pre-contract negotiations: Before signing a contract, you should receive a Precontractual Information Document (PID), which outlines details about the franchise. Make sure to review it carefully, along with the proposed contract.

Franchise agreement: Once you’ve chosen a location and secured financing, you’ll sign the franchise contract, which outlines the terms and responsibilities of both parties.

Resources

Several resources are available to help you get started with franchising:

The Belgian Franchise Federation: Provides information sessions, news, and handles disputes between franchisees and franchisors.

The franchise.be website: A platform with practical information about franchise opportunities and helpful tips.

The allesoverfranchising.be website: Offers legal analysis and support for franchisees in Belgium.

By following these tips and using available resources, you can take the first steps toward owning a successful franchise business.