The Franchise Business Model Explained

A franchise is a secure way to run your own business. We explain what a franchise business model is, the types of franchise agreements and more in our blog!

If you’re hoping to start your own business, you have probably done plenty of research on how to make it a success. However, have you considered franchising?

Franchising is a reliable way to set up and manage your own business but with additional support and security.

Here at Esquires Coffee, we are a leading coffee shop franchise in the UK, so you might say that we know a thing or two about the subject!

We have carefully developed our franchise in the UK over many years. Here, we explain exactly how the franchising business model works and what you should expect as a franchisee!

Contents

What is the Franchise Business Model?
Types of Franchise
Types of Franchise Business Agreement
Franchising with Esquires Coffee
The Advantages of Franchising
Is Franchising Right for Me?



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What is the Franchise Business Model?

A franchise business model is a legal and commercial agreement between a franchisor and a franchisee.

Individual franchise business models will vary between companies and industries, and will depend on the agreement set out by the franchisor.

However, there are some aspects which feature in most franchise business models. For example, a franchise is dependable on the agreement of two parties, the franchisee and the franchisor.

Below, our infographic offers a basic illustration on what to expect from a franchise business model with Esquires Coffee.

Esquires Coffee infographic on the franchise business model

The Franchisor

The franchisor is the creator of the franchise and legally owns the business brand. This means they are responsible for providing the franchisee with business operations and/or products to be sold under the brand’s name.

In many franchise agreements, the franchisor will provide:

  • A proven business model - in the UK, a franchise has to prove itself as a ‘business format franchise’ by testing their business model for a minimum of one year, according to the British Franchise Association (BFA).
  • Business strategies
  • Marketing tools and resources
  • Any training required

The Franchisee

The franchisee essentially pays the franchisor for the legal right to provide customers with services or products under the name of the franchise.

The fees a franchisee is expected to pay can include:

  • Franchise fee – Depending on the type of franchise, this can be an upfront payment or an ongoing one.
  • Working capital
  • Start-up costs
  • Royalties - Usually, the royalties paid to the franchisor will be a percentage of weekly or monthly gross sales as specified in the franchise agreement.

For more information about the cost of a franchise, click the link below.

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Types of Franchise

Franchising is a form of business model that can be pretty much adapted to suit any industry.

There are three main types of franchise that can be used across various types of businesses.

Product

A product franchise is when the franchisor permits the franchisee to distribute a product which is branded with the franchise logo, name and trademark.

Manufacturing

In this type of franchise, the franchisee is authorised to manufacture the franchisor's products then sell them using the name, logo, and trademark of the franchise.

Business

The most popular type of franchise is a business franchise. A franchisee is licensed with the rights to manage a business under the franchise brand, following the franchisor's systems and processes.

Here at, Esquires Coffee, we use a business franchise model that offers our franchisees the opportunity to operate under our established coffee brand.



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Types of Franchise Business Agreements

In a business franchise model, another consideration is the type of ownership of the business. Would you like to operate a single store or branch out to multiple stores?

Single Store Franchise

A single store franchise agreement means that a franchisee operates from one location or store.

With a single store agreement, there is the option to act as an investor or to have a more hands-on experience and take on a management role.

A cup of coffee in yellow coffee cup

Multi-Store Franchise

With a multi-store franchise agreement, the franchisee has the right to open more than one store. This type of arrangement allows the franchisee to develop their single store franchise business and expand to multiple stores.

Again, the franchisee can act like an investor or actively oversee the management of the multiple stores.

Regional/Master Franchise

A regional or master franchise agreement means that the franchisee is authorised to open multiple stores in a specific area and manage said area. This could be an area specified by the franchisor, a county or a region.

As a regional developer, you have the authority to open multiple stores. Alternatively, you can also become a sub franchisor to individual franchisees.

In this type of franchise agreement, the role of the regional developer can change slightly from a franchisee. Instead of having a hands-on experience, they are required to also sell franchises and work as operational support for the local stores.

It will be down to them, with the franchisor's guidance, to support the opening and growing of local sub franchises.



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Franchising with Esquires Coffee

Here at Esquires Coffee, we provide potential franchisees with all three franchise agreement opportunities: single, multi-store, and regional.

Our single store franchise agreement is perfect for those who have limited experience of previously running a business or for those require emotional relief from running a business without extra support.

If you are hoping for the opportunity to advance, then our multi-store and regional franchise agreements are the next steps to fulfilling your potential.

Regional Opportunities

One of the most appealing aspects of franchising with us is the opportunity to grow and develop.

If you have large plans and the desire to make the most out of our business franchise model, we can provide exclusive, regional developer and master franchise agreements.

With Esquires Coffee, our loyal following of Fairtrade and organic-seeking coffee lovers means that setting up regional stores is frequently met with success. You can grow your business while receiving the support and expert guidance of the Esquires Coffee shop franchise!

We have staff training programmes to support all stores, ensuring that each coffee house is a happy and healthy place for all employees and customers. As each store grows, so will your revenue as a regional developer.



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The Advantages of Franchising

There are many reasons to consider becoming part of a franchise.

One of the key draws for franchisees is having the freedom to run your own business while having the support and expertise of the franchise at hand.

Other benefits of franchising include:

  • Being part of an already established business - The hard work of gaining a brand presence has already been done for you!
  • A loyal customer base.
  • There is a tried and tested business model in place compared to starting your business from scratch.
  • Business financing tends to be more straightforward.



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Is Franchising Right for Me?

If you want the feel of running an independent business while receiving all the help and support from an experienced business that knows the market inside and out, Esquires Coffee could be the right franchise for you.

Skills and Aspirations

We appeal to entrepreneurs who want to be part of an innovative business, centred on providing today’s coffee consumer with ethically-sourced and Fairtrade products that they feel proud to purchase.

If you have the following skills and traits, you might be perfect for joining us at Esquires Coffee as a franchisee:

  • A strong work ethic
  • Capable of motivating a team
  • A proven record of success
  • Enthusiasm for business
  • The essential financial qualifications

Finances

Financially, there is much to deliberate as a franchisee, especially when upfront fees are required. Capital is essential, and liquid capital can increase the likelihood of being accepted by a franchise.

Lifestyle

In terms of lifestyle, weighing up how your personal life will be affected is integral.

You may want to consider the following:

  • How will it affect your family life? Running a franchise means that working hours are at your discretion.
  • Will you be balancing other jobs too?
  • Are you familiar enough with the area?
  • Are you passionate about running your own business?

A barista making a cup of coffee

If you’re looking to be part of a franchise that offers a sense of individuality while remaining thoroughly supported by an experienced business model, we want to hear from you!

Why not click on the link below and contact us to discover more about the opportunities we provide?

Whether you’re interested in a single store, multi-store or regional franchise, we look forward to talking to you!

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