Franchise blog

Franchising is a method of establishing a new business or even of upgrading an existing business, whereby the business of the licence holder (the franchisee) is integrated into the distribution and support system of the licence grantor (the franchisor). That is, it involves the permission to use the brand name of an existing successful business. So, does that in itself define what franchising is? The answer is no, as to the definition of a franchise we must also incorporate the overall support process provided by the licensor company, with the transfer of know-how and its guidance.  

More specifically, for the licence holder (the franchisee) to be able to say that their business is a franchise, they sign an agreement within the framework of which a specific geographical territory is specified within the boundaries of which they will be able to use the trade name of the franchisor and will be supported by its business model. This is one of the basic elements that defines franchising. Through this method, the licencee entrepreneur quickly and directly learns the secrets of the job resulting from the accumulated experience of the Licensor. It should of course be noted that despite being integrated into the franchising system, the Franchisee remains an independent tradesperson who does business entirely on their own responsibility.

What, though, are the benefits of a company that becomes a franchise? Below, we list some of the advantages that fully answer the question of ‘what is franchising?’ and what is included in this system.

• This is about an already well known brand with a fully developed clientele.
• Furthermore, the Franchisor has developed the provided services over the course of many years expending considerable financial resources. In addition, they are constantly taking action and making efforts to upgrade the product/service. Thus, the licencee need not reinvent…the wheel!
• The licencee receives long-term business support and guidance on financial management.
• Constant technical and business training is provided in all areas that are required for the functioning of the business both for its personnel and its executives.
• Ongoing marketing support is provided through an organized advertising mechanism actualized both by the franchisor on a national scale and also by the business entrepreneur themselves on a local level, but always with guidance and advice.
• There is a ready and organized network of suppliers. Even when the business involves the provision of services, the network of suppliers will prove useful for the initial setting-up of the company.

Ultimately, what is franchising and why should I opt for it? Because it concerns a method of creating a business that is quite secure, with reduced business risk and a strong likelihood of success. Usually, all it takes is for the franchisee to follow, as they are required to, after all, the instructions of the franchisor regarding the setting up and running of the business as well as the methods of service provision or product distribution.

Of course, being a franchise is not enough for a business to succeed. One further basic element is for the franchise to have already conducted the required market research on which franchises are successful, to decide how much money they want to invest and ultimately be integrated into a sector that is suited to them and appeals to them.

Τhe origin of franchising dates back to the middle of the 19th century and specifically to the brewing industry in Germany. In the U.S.A., starting in 1930, large fast food and motel chains sprang up. Now, franchising in Europe accounts for 10% of retail trade, in Greece it is approximately 5% and in the U.S.A up to 50%.

Learn more about GRAPSA Franchising. If you like education, then at GRAPSA you will find one of the best franchises in Greece!