Franchises usually bring two related things to a business. The first is name recognition. When you thing about fast foods and McDonalds you know what you are getting when you see those Golden Arches.
The second thing that they bring is a standardized way of doing business, a similarity of product if you will. That Big Mac is made the same in Canada the USA and in Europe.
They sometimes offer some cost savings in the purchase of supplies and group advertising rates where you participate in advertising the chain and the chain helps you promote your individual business.
Some of the financial service franchises for example also get centralized services lie market research.
They typically charge a fixed up front fee and a percent of revenue. Terms may be limited or open-ended.
A franchise may or may not have some geographical exclusive rights.
Business development and management assistance may or may not be offered.
In my area of engineering (civil and construction) these are not services that are critical to developing a business. Name recognition is important when people are making small and repeated purchasing decisions, not when they are making large one time buys.
The way of doing business and similarity of product is also not as important in an industry where everything is a “one of” product.
Input materials and supplies are not a significant portion of my operating costs so saving 10% there is not a reason to give up some autonomy.
Business development is a direct person-to-person contact in my industry so mass advertising is not an issue.
I’d give it some critical thought. Is what they are offering worth the up front costs and on going fees for the services that they are offering?
Some industries simply do not lend themselves to the franchise method and I believe that engineering is one of them.
Rick Kitson MBA P.Eng
Construction Project Management
From conception to completion
