The benefits of opening a franchise business are primarily related to an easier company formation process and management model, owing to relying on an existing company framework. Compared to starting a new business, the franchisee adopts an already tested business model which can provide for a higher success rate. Additionally, the party purchasing the franchise will also have access to advice and guidance from the franchisor. We summarise the advantages of starting a franchise and some of the locations that are worth taking into consideration.
The franchisor and the franchisee
For the franchisee – the company or individual acquiring the business licenses – the main advantage consists of lower business risks. In most cases, the franchisor will offer special training and support apart from the business model and know-how acquired when entering the franchise agreement.
On the other hand, the franchisor – the company that licenses its business model – has a significant advantage in terms of expanding its business. Franchising allows an already successful company to enter other markets, especially secondary and tertiary ones. Moreover, the franchisor is not directly responsible for the debts and liabilities incurred by its affiliate, as it would be in the case of a branch.
Jurisdictions to consider when opening a franchise business
The ability to expand their business to other markets through franchising is important for many international companies and this expansion can prove to be a lucrative business decision. In Europe, investors can look towards opening a franchise in Spain. The market is recovering well and franchises like cafes and restaurants can be particularly successful in Spain, together with retail businesses in the fashion industry. The United Kingdom is another attractive location to base a franchise in Europe and has an all-important advantage for many international companies: ease of doing business and communication due to the English language. Investors who open a franchise in London or another city in the UK are advised to seek the aid provided by a defence solicitor in case of any legal issues.
Two other jurisdictions worth taking into consideration for franchising purposes are Seychelles and Malaysia. Opportunities include jewellery franchises, cafes and restaurants. Foreign investors are advised to seek adequate aid when entering a new market particularly because the local requirements may ask for different special permits and licenses for businesses, franchises included. Investors who are interested in franchising in Malaysia can also look into other options apart from restaurants, such as spas and entertainment centres.
Franchising is perceived as a safer business option, compared to starting a brand new company. Investors should explore all of the available franchising opportunities in a particular jurisdiction and decide whether this business model is the one suited to their needs.