Franchise, Discussion Between Zaki And Banu Deep Understanding 

Zaki: Hello Banu, how are you today?

Banu: Hello Zaki, everything is going well, thank you. And you ?

Zaki: It’s going well, thank you. I wanted to talk to you about something today. Have you ever thought about opening a franchise?

Banu: Yes, I thought about it. Franchising seems like a good business opportunity, but I’m not sure where to start. Can you tell me more?

Zaki: Of course! A franchise is when one company, the franchisor, allows another person or company,and allows the use of Name which is very famous and high authority in market, they have built it after putting very high efforts to get the name very famous. 

Actually company gets this name and fame only with people loves the product and starts talking about such business we can say in short mouth to mouth appreciation of the product.  

The franchisee, to use its brand, business model and support to open a new outlet. For example, companies like McDonald’s, Starbucks, or Subway operate on the franchise model.

Banu: Okay, I understand. But how do you get a franchise?

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Zaki: Very good question, first you have to choose the right sector. Do you want to work in restaurants, retail, services, or something else?

Banu: I think catering could be interesting. I like the idea of running a café or restaurant.

Zaki: Very nice, that’s a great idea. Once you have chosen the sector, you need to do some research on the different franchises available. Each franchise has its own conditions and requirements. For example, some require a higher initial investment than others.

Banu: Yes, I see. So, after choosing the franchise I’m interested in, what’s the next step?

Zaki: The next step is to contact the franchise for more information. Typically, they will provide you with a brochure or information document about the franchise, called a Pre-Contractual Information Document (PID). 

This document contains all the details about the business, costs, obligations, and benefits of the franchise, normally they first visit your location and find if the same franchise is available nearby the purpose is they don’t want to keep a distance from one franchise to another.

Banu: That sounds pretty serious. Are there specific criteria to be accepted as a franchisee?

Zaki: Yes, in general franchisors look for people with a certain level of experience in management or in the franchise industry but some companies provide training. They also want to make sure you have the financial resources to operate the franchise.

Banu: And what is the price range for the initial investment?

Zaki: It varies a lot depending on the franchise and the sector. For example, for a small coffee franchise, it could be between 50,000 and 100,000 euros. For larger franchises like a fast food restaurant, this can range from 200,000 to over a million euros, normally it depends upon place to place you don’t get discouraged with the amount.

Banu: Wow, that’s a big investment. Are there financing options available?

Zaki: Yes, many franchisees obtain business loans to finance their franchise. Sometimes franchisors have agreements with banks to help their franchisees obtain financing. It is also possible to use personal savings or find investors. It also differs from place to place and company to company normally most are liberal.

Banu: That’s good to know. Once I have the financing, what is the next step?

Zaki: After obtaining the financing, you will have to sign the franchise agreement, get some training from them. This contract details the rights and responsibilities of both parties. This is a very important step, so it is advisable to hire a franchise lawyer to review the contract before signing it, but this adds more financial burden so you can avoid it.

Banu: Yes, I understand. And after signing the contract?

Zaki: Once the contract is signed, you will receive training from the franchisor. This training is designed to help you understand how to manage the franchise, use company systems, and maintain brand standards, this step is very important. You have to do this very seriously and note down each step without ignoring it by thinking this is easy or simple, everything looks simple but they have more weightage.

Banu: Is the training long?

Zaki: It depends on the franchise, but generally it lasts a few weeks to a few months. During this time, you will learn everything from daily management to staff training to marketing techniques, and many more things which are very important.

Banu: It’s reassuring to know that there is training. And after the training, am I ready to open my franchise?

Zaki: Almost! After the training, you need to find a location for your franchise. The franchisor can often help you choose a good location based on market analysis and local demographics. Once the location is found and the preparations are made, you can open your franchise, they focus on your success, your success is success for them.

Banu: It seems to be a well-structured process. Is there continued support from the franchisor after opening?

Zaki: Yes, most franchisors offer ongoing support. This includes regular visits to check that everything is going well, additional training, marketing support, and advice to improve the franchise’s performance, again the same point they need your success.

Banu: It’s really good. Do you know if there are any disadvantages to opening a franchise?

Zaki: Yes, there are some drawbacks. For example, you must follow the rules and directives of the franchisor, which can limit your freedom of management. Additionally, you have to ignore this thinking, there are often regular royalties to be paid to the franchisor, which can affect your profits. Ignore this too because once you are successful then everything is enjoyable and feels delightful.

Banu: I see. But on the other hand, we benefit from the notoriety of the brand and the support of the franchisor.

Zaki: Exactly. This is one of the great advantages of franchising. You have less risk because you use a proven business model and a recognized brand, a famous brand and on the other hand your name will be famous, and you have better chances of opening new branches, even many other brand companies will start contacting you.

Banu: Thank you very much, Zaki. I now have a better understanding of what opening a franchise entails. I will begin my research to find the franchise that suits me best.

Zaki: Grate with pleasure, Banu. If you have any further questions or need assistance, please let me know.

Banu: Really I want more information, I want to ask you some. 

Zaki: Definitely 

Banu: Thank you, Zaki! I’m really excited to start this new adventure.

Zaki: It’s a big step, but with the right preparation, I’m sure you will succeed. Remember to carefully evaluate all your options and seek professional advice if necessary.

Banu: Absolutely. I will take my time to make sure I make the right choice. It’s a big investment, so I want to make sure I do it right. If needed I like to borrow some amount from friends and relatives.

Zaki: Yes this is a great approach. And remember, even though the road may seem long and complex, the support you’ll receive from the franchise can really make a difference, normally it takes 3 to 6 months for getting full fledged business success, this is universal reality.

Banu: Yes, that’s true. The ongoing support is a huge benefit. It gives me a lot of confidence to know that I will not be alone in this adventure, I feel like I am getting the full support of the company.

Zaki: Exactly. And don’t forget, a franchise is like a big family. You will always have people to talk to who can share their experiences with you.

Banu: It gives me satisfaction to know that. Thanks again, Zaki. Your advice is very valuable.

Zaki: Hello Banu! I am very well thank you. And you ? Where do you reach with your research into franchising?

Banu: It’s going well, thank you. I did quite a bit of research and found a few franchises that interested me. I think I’ll focus on cafes. There are two franchises in particular that I like: Starbucks and Costa Coffee, which are well famous.

Zaki: That’s great! These are two very famous franchises, I know. Have you already contacted them?

Banu: Yes, I have sent requests for information and received documents from them. I’ve read the Pre-Contractual Information Documents, and it looks interesting, and appealing. Both offer good support and comprehensive training, I love this.

Zaki: Excellent! And what do they say about costs and conditions?

Banu: For Starbucks, the initial investment is quite high, around 400,000 euros, for my area. Costa Coffee is a little cheaper, around 300,000 euros, for my area. Both also charge monthly royalties based on sales, and we will be getting great success in my area.

Zaki: It’s a significant amount, but it’s understandable for such well-established brands. Have you already thought about how you are going to finance your project?

Banu: Yes, I spoke with my bank and they are ready to give me a business loan.I approached some of my family and friends. Some are saying they will support but I don’t know if they will actually be ready to support. I also have some savings that I will use. I think I’ll have to find an investor or partner to make up the difference.

Zaki: That’s a good idea. A partner could provide not only funds, but also complementary skills. Do you have anyone in mind?

Banu: Yes, I have a friend, Ali, who is interested. He has experience managing restaurants, so he could be a valuable asset.

Zaki: Ali seems like a great choice. Having someone with practical experience can really help you succeed. Have you already talked to him about this possibility?

Banu: Yes, we had some discussions. He’s very excited and thinks it’s a great opportunity. We will meet with representatives from both franchises soon to discuss details.

Zaki: This is fantastic! Make sure you ask all the necessary questions and understand the financial and operational commitments, please note each and everything. Having a clear vision from the start is crucial.

Banu: Absolutely. We will ask for clarification on ongoing support, and as per your best advice I will note each and every point even though it looks simple, well about  local marketing, and performance expectations. We want to make sure we can follow the franchise’s standards, and training.

Zaki: It’s essential. Also, remember to check the clauses in the franchise agreement regarding termination and possible penalties. It’s always good to be well informed about all legal aspects, read each and every point.

Banu: Yes, we will definitely do that. I think we will also hire a specialist lawyer to review the contract before signing anything.

Zaki: It’s a wise decision. A lawyer can help you avoid potential pitfalls and negotiate more favorable terms if necessary. Normally people avoid this step because many people are running this type of franchise.

Banu: Yes, that’s what we think too. I’m so excited to start this adventure. It takes a lot of preparation, but I’m ready to put in the work, and I love this.

Zaki: Your enthusiasm is contagious, Banu! I’m sure you will succeed. Opening a franchise is a big adventure, but with your determination and good preparation, a positive approach you have every chance of success.

Banu: Thank you, Zaki. Your advice really helped me see things more clearly. I feel much more confident now.

Zaki: It’s always a pleasure to help. Entrepreneurship needs to be fearless then only you will become successful, only fear stops people from taking the first step.

Don’t forget, the franchise network is also there to support you. Do not hesitate to use all available resources.

Banu: Yes, I won’t miss it. I will also try to connect with other franchisees to learn from their experiences.

Zaki: Great idea. The experiences of others can be very instructive. They can share practical tips and advice that you won’t find in official documents, my advice is don’t go in a flow of many other companies that will distract you and you will never start, focus only on the two you have mentioned.

Banu: Exactly. I will organize meetings with the two which I have mentioned but local franchisees to talk with them.

Zaki: Perfect. I’m really happy to see how committed you are to this project. Please keep me posted on your progress and ask for my help if you need it.

Banu: Thank you, Zaki. I will not hesitate. See you soon !

The next day we both met again to discuss about franchise project

Zaki: Hello Banu! How are you ? Where are you with your franchise project?

Banu: It’s going really well! We decided to choose Costa Coffee. After several meetings with their representatives, we found that their conditions and support were best suited to our needs.

Zaki: This is fantastic! Congratulations on this decision. How are the preparations going?

Banu: Very good. We signed the franchise agreement after having it reviewed by our lawyer. We also found an ideal location for our café, right in the city center, with a lot of traffic.

Zaki: This is excellent news. Please make a note the traffic should not be moving in vehicle the traffic should be walking and chatting which will add advantage. This is what I believe. Please ask this with franchise representatives for better understanding about the traffic.Location is crucial to the success of a coffee shop. And how does the training go?

Banu: The training is super intensive but very useful. We learn everything from coffee recipes and management techniques to marketing and staff training.

Zaki: It looks really complete. It’s great that Costa Coffee offers such detailed training. How is Ali doing with all this?

Banu: Ali is very motivated. He learns quickly and is already preparing our local marketing plan. We are both very optimistic.

Zaki: That’s great to hear that. Do you already have a planned opening date?

Banu: Yes, we plan to open in a month, just in time for the summer season. We think this will be the perfect time to attract a lot of customers.

Zaki: That’s a great idea. Summer is a time when people like to go out and relax with a good coffee. I’m sure you’ll be a hit.

Banu: We hope so. We have also planned a grand opening with special promotions to attract the first customers.

Zaki: Perfect. Opening promotions are always a good way to make yourself known and quickly build customer loyalty.

Banu: Yes, and we will also use social networks to promote our opening. Costa Coffee helps us a lot with online marketing.

Zaki: It’s great to have this support. Social networks can really make the difference in attracting people, and some papers ads will help you a lot, normally people love to explore more about the local area and new things.

Banu: Absolutely. We also reached out to a few local influencers to come to the opening and share their experience.

Zaki: That’s a great strategy. Having influencers can attract a lot of attention and create buzz around your coffee.

Banu: Yes, we are really excited. Everything seems to be falling into place.

Zaki: I’m so happy for you, Banu. You’ve worked hard to get here and it’s going to pay off. I’m sure your coffee will be a great success.

Banu: Thank you, Zaki. Your support and guidance has really helped me through this process. I am very grateful.

Zaki: It’s always a pleasure to help. I will definitely come to the inauguration to support you and enjoy delicious coffee.

Banu: That would be great! We would love to see you there. Thanks again for everything.

Zaki: See you soon, Banu. I wish you much success for the opening and beyond.

Banu: Thank you, Zaki. See you soon !

Franchise FAQs  

What is a franchise?

Answer: A franchise is a business model where one company (the franchisor) grants another person or company (the franchisee) the right to use its brand, products and business model. 

The franchisee opens and manages a new point of sale while respecting the standards and procedures established by the franchisor.

What are the advantages of opening a franchise versus starting an independent business?

Answer: Benefits include the use of an established brand, a proven business model, ongoing training and support, centralized marketing campaigns, and reduced financial risk due to the experience of the franchisor.

How to choose the right franchise?

Answer: To choose the right franchise, it is important to thoroughly research the franchises available in the industry of interest. Consider the costs, support offered, brand reputation, and terms of the franchise agreement. Also talk to current franchisees to get their opinions.

What is the initial investment cost for a franchise?

Answer: The initial investment cost varies greatly depending on the franchise and industry. For example, for a small coffee franchise it can range from 50,000 to 100,000 euros, while for a fast food franchise like McDonald’s it can range from 200,000 to over a million euros.

What are the financing options for opening a franchise?

Answer: Financing options include business loans, personal savings, investors, and sometimes financing programs offered by the franchisor. It is advisable to speak with banks and financial advisors to explore the best options available.

What is the typical duration of training offered by the franchisor?

Answer: The length of training varies by franchise, but typically lasts from a few weeks to a few months. The training covers all aspects of franchise management, including daily operations, marketing, and staff training.

What are the criteria to be accepted as a franchisee?

Answer: Franchisors generally look for candidates with a certain level of experience in management or in the franchise industry. They also require sufficient financial resources to cover the initial investment and operating costs.

What support does the franchisor provide after opening the franchise?

Answer: Ongoing support from the franchisor may include regular visits, additional training, management consulting, marketing support, and management tools. This support is designed to help the franchisee succeed and maintain brand standards.

What are the financial obligations towards the franchisor?

Answer: Financial obligations typically include an initial entry fee and monthly royalties based on sales. These royalties may include franchise fees and contributions to the national marketing fund.

What are the main disadvantages of opening a franchise?

Answer: The main disadvantages include the high initial cost, ongoing royalties which can affect profits, and the need to follow the franchisor’s strict rules and guidelines, which can limit management freedom. However, the benefits of brand awareness and support can outweigh these disadvantages.

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