Franchising: Semi-independence

Another option for taking control, without creating your own business, is “dependent independence” or franchising.

A franchisee purchases, at the cost of a license fee plus annual tax on turnover, a ready-made business idea or brand from the franchisor. The license is limited in time and space. The fast food chain McDonald's is one of the best known representatives of this model in Switzerland.

There are several advantages to this system: the entrepreneur can benefit from the franchisor's experience. He or she also gets help with training, purchasing merchandise, marketing and advertising. Investment is relatively low because the sites are financed by the franchised partners.

However, franchising also presents disadvantages for the entrepreneur. Business freedom is limited, as the path to be followed is set out by the franchisor. Also, exiting a contract is often difficult, even if the business concept has not been successful on the market.

Choosing a franchisor: The questions to ask yourself

To minimize the risks of bankruptcy, a future franchisee needs to ask certain questions before accepting a contract. Here is an overview:

  • How long has the franchisor been on the market?
  • What skills and experience does management have?
  • Are there any references?
  • How is the financial situation presented?
  • How is the company image presented?
  • How many franchise managers are there and how long have they been franchise managers?
  • Does the franchisor conduct an aptitude test with applicants?
  • Is the franchisor a member of a professional association?
  • Does the franchisor attempt to dictate prices unacceptably?
  • Do you have to buy the merchandise and production resources from the franchisor?
  • Is professional and commercial knowledge necessary?
  • Is there comprehensive training and good preparation for the business?
  • Is there a manual on how to manage the business?
  • Are help and advice available if required?
  • What services does the franchisor offer in terms of buying, advertising and PR?

Sign up to our newsletter to stay informed (on the top right).


Information

Last modification 17.08.2018

Top of page

EasyGov logo and link to the online desk for companies
https://www.kmu.admin.ch/content/kmu/en/home/concrete-know-how/setting-up-sme/starting-business/first-step/business-idea/franchising.html