The Cornerstones of Ethical Franchising
The word “ethical” comes from the Greek word “ethos” which means “moral character” and describes a person or behavior as right in a moral sense – truthful, honest and fair.
Investing in a new business is a huge commitment, both financially and emotionally, and with so many franchise opportunities available, it’s critical that a potential franchisee choose the brand and company that’s right for them. Of course, a potential new recruit should thoroughly research the history and finances of the make and model that caught their eye. Equally important is to look at how the franchisor conducts its business and business relationships. Unfortunately, as in all industries and walks of life, there will be franchisors who will not always operate in a fair and honest manner, or will not have the right systems in place to support and support their franchise network. education they need to succeed. These franchisors are of course to be avoided!
An ethical franchise is one that is committed to fairness and good practice. While choosing an ethical franchise is by no means a guarantee of business success, it will put a new franchisee in the strongest possible position as they embark on their business journey. There are six main characteristics of an ethical franchise:
The business model must be proven
An ethical franchise offers a business opportunity with a proven track record of success. The advantage of buying a franchise is that it comes with the benefit of the franchisor’s experience of working within the chosen industry, with all the major systems and processes in place. The expensive and time-consuming mistakes should all have been made before the franchisor puts the franchise up for sale.
The business model must be profitable
A franchisee will want to invest in a franchise business to make money. It must be financially sustainable for the franchisee, but also be profitable overall as the parent brand to maintain the company’s future security for the franchise network.
The business model must be transferable and learnable
For a franchise to be successful, it must run on a model where new franchisees can be trained and supported to set up the business in multiple locations, with all franchisees providing the franchisor’s product or service to the same quality standards with using the franchisor’s processes and procedures.
The franchise model should value training and support
An ethical franchise will have a comprehensive training program to equip a new franchisee with all the tools needed to start their business, along with a structure to ensure that franchisees receive ongoing training and development opportunities and support.
The franchise agreement must be fair and reasonable for both parties
The franchise agreement forms the backbone of the franchisor-franchisee relationship. It must be fair to both parties, although there will be sections aimed at the franchisor to protect the overall franchise brand and the entire franchise network. As a UK franchisor, our legally binding franchise agreement must comply with UK law, European Community law and the European Franchise Code of Ethics.
The franchise agreement must be entered into by both parties with the benefit of full and open disclosure
There must be openness and transparency in all discussions that take place between franchisor and franchisee before the franchise papers are signed. Financial projections and forecasts must be realistic and achievable.
Having the opportunity to speak with existing franchisees within a network to get a sense of what life within the brand is really like and get their opinion and experience can be invaluable in determining whether a franchise opportunity is the right fit for you. right “fit” for you. A good franchisor will be willing to facilitate such conversations, but also take the time to make sure you’re the right “fit” for them and their brand. Franchising is a two-way relationship and an ethical franchisor will only look to recruit franchisees with the right personality, skills, relevant experience and financial resources to make the business a success.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.