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Get Started in Franchising: Who owns what in a franchise?

by Kurt Illetschko

Questions asked frequently at franchise seminars indicate that this topic is surrounded by confusion. It’s quite simple: The franchisor owns the intellectual property while the franchisee owns the business infrastructure. What does this mean?

The franchisor’s assets
A franchise is granted, never sold. Franchisees tend to overlook this important fact and become very aggravated when reality hits home. In effect, it means that the franchisor permits the franchisee to use the know-how, trade secrets and registered trademarks of the network, known as the franchisor’s intellectual property, but always subject to guidelines issued by the franchisor and only for the duration of the franchise agreement.

Should the agreement come to an end, regardless of the reasons therefore, the former franchisee will no longer be permitted to use the intellectual property. He/she will have to remove all signs, symbols and materials that would cause a reasonable person to believe that the business is part of the franchise network and return to the franchisor all lists containing customer and trade contacts.

The franchisee’s assets
The franchisee owns the equipment, furnishings, fittings, stock, debtors and cash reserves in the business but is obliged to operate the business in compliance with the franchisor’s guidelines.
Some franchise agreements contain a clause to the effect that should the agreement be terminated, the franchisor will purchase branded items at cost.


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Get to Grips With Book Keeping: Book-keeping history From approximately 4000 BC , the growth of trade led to a need for record keeping in the Mesopotamian river valleys. Findings dating from about 3300 BC indicate that Sumerian temple officials used wet clay tablets to record stocks and transactions. For example, landowners would record the number of livestock placed under the care of farmers with special clay symbols.
Close More Sales: Keep price breakdown information to yourself In a selling situation, a professional buyer will ALWAYS push you for price breakdown information, and the more you give them, the more they’ll use it against you! That’s why you should always keep price breakdown information to yourself.
Get to Grips With Book Keeping: Ask for a referral with every customer you meet After every sales visit, regardless of the outcome, if you can acquire the habit of asking a simple question just before you leave, you will be able to maintain a constant flow of high quality sales leads.
Close More Sales: Confirm every sales appointment with a PS letter or email Have you ever gone to an appointment that you had originally made by telephone, only to find that when you get there, the prospect is unavailable because they had forgotten about it? If so, then you’ll already know how frustrating it is - not to mention a complete waste of your valuable time! That’s why it’s always a good idea to make a point of confirming every sales appointment by letter or email, straight away.
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Close More Sales: Use the ‘try before you buy’ close In a face-to-face selling situation, it usually proves to be an irresistible offer to let your prospects ‘try before they buy’ and enjoy the benefits of your product during a free trial period. Providing your product lends itself to his idea, it’s a great way to reduce sales resistance, and give your product the chance to sell itself.
Close More Sales: Exercise your expertise power As an experienced professional salesperson, the chances are you know more about your industry, your market, your competitors and your products and services than just about any other person alive – and don’t forget, that includes your buyers! The fact is, you are an expert, and let’s make no mistake about it, during the course of a sale that expertise is a powerful persuasive force.
Close More Sales: Harness print power The fact that something is printed tends to enhance its believability. It has a kind of built-in authority that the spoken word or handwritten materials just cannot match.
Close More Sales: Pay unexpected attentions Giving ‘unexpected attentions’ is the simple idea of delighting your customers by sending them a little something from time to time – something that’s totally unexpected.
Close More Sales: Use pre-printed telephone inquiry pads There are a number of benefits to using telephone inquiry pads. Quite apart from ensuring that you always come across as highly professional whenever answering the telephone to a new prospective customer, over time it provides a source of information that is crucial to your ability to evaluate the effectiveness of your promotional activities.
Close More Sales: Explore the buyer’s personal interests Always go beyond just finding out what buyers need and want and try to uncover any underlying personal motivations too. In effect, the personal interests of the buyer often represent a ‘hidden agenda’ which is potentially the most powerful of all information for the salesperson.
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Get Started in Franchising: Financing a franchise Investing in a franchise is probably the largest financial transaction you will ever undertake, and you will have to borrow money. In most instances, this money will come from a commercial bank but other sources of funding exist. Let’s look at these first.
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There is no such thing as ‘the best franchise’. If it would exist, everyone would invest in it, the market would become oversaturated and it wouldn’t stay the best franchise for very long. The human factor comes into play as well.
Get Started in Franchising: International franchises People go on holiday, see some exciting concept and want to take a franchise back home. Unfortunately, it’s not quite as straightforward as that. Franchisees are entitled to receive a business package that has been tried, tested and proven to work – in their market! Unless the foreign company has representation in your home country, granting you a franchise would be outright irresponsible.
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