Every industry has its own jargon, and franchising is no different. If you’re thinking about taking the leap and investing in a franchise business, don’t let any worry about terminology get in your way.
As a leading coffee franchise, we understand that there are plenty of terms that might be new to those new to the game. We’ve compiled a helpful franchising glossary with the key terms and buzzwords you’ll likely hear on your franchising journey and what they mean. From working capital to franchising fees, we’re here to ensure you understand every step of your franchise venture.
Franchisee
A franchisee is a person who purchased a franchise and is responsible for running a business under the franchisor's brand. As a franchisee, you'll be self-employed and sell products or services from a proven business model with the guidance and support of a franchisor. A franchisee can be a new starter or an experienced businessperson who is responsible for the daily operations of running a franchise within their brand guidelines.
Franchisor
A franchisor is the owner of an established licensed business model that allows other entrepreneurs to use its brand and business model. A franchisor grants a franchisee permission to use the company’s products, services or marketing to customers in exchange for franchise fees and ongoing royalties.
Franchise Agreement
A franchise agreement is the arrangement of business between two parties, the franchisee and the franchisor. The document will include the legal and contractual terms set out in the franchise agreement. A franchise agreement is important to ensure both parties are aware of their responsibilities within the agreement.
Franchise Fee
The franchise fee is the initial fee you pay for the rights to use the franchise’s name and practices, such as brand name, brand logo, trademarks and property licences. This fee also involves the costs of goods and services the franchisor provides to help the franchisee open their new business. Franchise fees are paid upfront from the get-go, and these are usually around £10,000 - £50,000. The cost of the Esquires Coffee franchise fee is £19,500.
Marketing
When opening any business, it is essential that marketing methods are applied. Marketing manages the relationship between business, customer and stakeholders and ensures your brand is recognisable and positioned in the correct light. When you become an Esquires Coffee shop owner, you will be supported with marketing support from leading professionals to ensure your business thrives.
Master/Regional Franchise
Our master/regional store franchise option is available to individuals who meet the criteria to be eligible for ownership of a specific area or territory. A regional franchise partner has the opportunity to open multiple outlets in one location or sub-franchise to individual franchisees.
Multi Store Franchise
Our multi-store coffee franchise option is designed for partners with a track record of success who want to expand into further business growth. With a multi-store franchise option, you can manage multiple premises in an area.
Royalties
Royalties are a continuous payment to the franchisor that is payable weekly, biweekly or monthly. At Esquires, your royalty payment guarantees you ongoing services by the franchisor, including operational support, research and development, marketing and more.
Once your Esquires business is up and running, you will be expected to pay royalties. Occasionally, these might be an agreed flat rate, but more often, they are a percentage of your gross sales (sales minus VAT). The percentage of royalty fees is usually between 4-8% but can increase up to 50%+ depending on the industry and scale of the business.
Single Store Franchise
A single-store franchise means you open one solo store with the support of your franchisor. A single-store franchise is an excellent option for those taking their first steps into owning a business.
Start-Up Costs
Start-up costs are the non-recurring costs included when beginning your business venture (not including assets). For a single-store Esquires Coffee franchise, the following elements would be included in the start-up cost:
- Support in hiring a team and training
- Store design
- Equipment
- Marketing
- Property fees
- Fit-out and furniture costs
Term of Agreement
The term of the agreement is the length of the franchise agreement. This will also outline the terms of franchise renewal.
Territory
A franchise territory is an area in which a franchisee can open their business. Likewise, if another person wanted to open a franchise in your chosen area, this would not be allowed. The idea behind having franchise territories is so that the franchisee can set up their business without the worry that another franchise business becomes competition. That being said, franchise territory is only extended to competitors from within your brand, so there will likely be external competition to consider. A master franchise licence will allow you to have full territory of one area, meaning you can open multiple outlets in one go.
Working Capital
Working capital is the amount of money you will need to support your business that is not covered by your revenue. To open an Esquires Coffee franchise, you will need to have a minimum of £100,000 liquid.
If you would like any further information about the franchising opportunities available to you or would like some guidance on how to get started, feel free to get in touch with our friendly team today.
As an Esquires Coffee franchise partner, you'll be a part of a proven brand that values community spirit while benefiting from a chain's know-how and customer loyalty. We've been honing our craft to build a franchise business model that is a trustworthy path to success, and we support all our franchisees to ensure they are equipped with all the knowledge and guidance they need to set up their own business confidently. So, what are you waiting for? Join our Esquires family today!
