Are you hesitating between running a franchise or opening your own business? In today’s article we address those people willing to set up a hospitality franchise, its advantages and disadvantages. It is not easy to open a business related to the hospitality industry. Many choose this option because they think it will be an easy business to run and will allow them to have a stable job. The truth is that nothing is as it seems in the hospitality world, and our experience with some of our clients tells us that you have to work very hard to get ahead. If you think you are qualified to run a hospitality business, franchising can be a great option. This format has the prestige and endorsement of a brand already established in the market and can minimize the risk of failure.
Do you want to know what are the conditions to be able to set up a hospitality franchise? We explain it to you!
What is a franchise?
A franchise is a business model in which a person or company (the franchisor) assigns to another(franchisee) the rights to exploit its business model in exchange for an economic compensation consisting of an initial fee and monthly fees agreed upon by both parties. This concept is well established in the hospitality industry. While a few years ago it was limited to fast food establishments, it is now expanding to other areas such as themed restaurants, betting shops or breweries.
What do I need to set up a hotel franchise?
Carry out a business plan
When starting a business, it is essential to prepare a business plan beforehand. This is also the first step in opening a franchise. The preliminary business plan for a franchise is slightly different from the one you would make if you decide to open your own business. You should still analyze whether the company you are interested in has a proven successful business model. For this you will have to define a strategy to follow; that is to say, the benefits that you are going to demand when opening your franchise and what you are going to offer in exchange as a franchisee.
Be aware of the laws that affect you
When you start a business it is necessary to take into account the laws that affect the activity you are going to carry out. In your case, you will have to take a look at the
Royal Decree 201/2010
which regulates the exercise of the activity in franchising regimes. In addition, Article 62 of the Retail Trade Law you will be able to find the regulation of the franchise regime.
Check whether there is an entry fee
Find out which franchises in the sector charge this fee and which do not. You can save money in case you don’t get paid and thus meet other expenses more comfortably.
Royalty fee
The royalty fee is the percentage of the monthly turnover that you will have to pay for the exploitation of the trademark. Analyze the percentages established in other businesses and try to negotiate yours based on your needs.
Duration of contract
The contract is the most important part when negotiating the franchise operation. It will set out all the conditions that you have agreed with the franchisor.
Investment on your part
The investment for adapting the premises will be your responsibility. Although the decoration of the premises also depends on the brand you are going to work with, you will be the one who will have to pay for the furniture.
In Fiaka we are experts in furniture for franchises . As manufacturers of furniture for hospitality we adapt to all kinds of styles and decorations always adjusting to the budget you have. Our furniture experts and designers of interior and exterior spaces are capable of giving life to any corner of your premises, whether it is a hotel, a terrace, a hotel or a leisure establishment. Our clients include successful franchises such as
Dorsia
o
Telepizza
.
Do not spend too much time thinking about the investment you will have to make without consulting us first.
Advantages of opening a hotel franchise
There are many advantages to opening a franchise rather than your own business. These would be:
Consulting and training included
No problem if you have no training in the business you would like to open. The franchisor will offer you advice on how to find a suitable location, carry out the opening procedures and manage the day-to-day operations, among other things. If you do well in business, the franchisor will make a profit too.
Minimal risks
A business whose model is based on franchising minimizes risk by offering a brand that already works elsewhere. You will just have to take care of it. There are many points when setting up your own business that are very complicated, for example, making your business known to potential customers or organizing the way you work. That work will already be done when we talk about a franchise.
Simplified supplier management
Another thing you will have to forget about is the search for suppliers. In franchising, the franchisor will already have a supplier, and costs are minimized because there is a higher volume of orders.
Inconveniences of opening a hospitality franchise
Additional costs
You will have to pay an entry fee, an advertising fee and a royalty, which are expenses that you would not have in your own business.
Lack of autonomy
Even if it is your business, you will notice that as a franchisee you will have to follow a series of rules that the franchisor will have already established. Standards such as the decoration of the premises, employee uniforms or the aesthetics of the premises will already be imposed in the contract. In addition, when you open a franchise, you will always report to a superior and you will have to comply with the rules you agreed upon in the contract.
