Developing a Franchise Model
Choosing the Optimal Path for Brand Expansion
The Issue: Finding the best route for brand growth
Many brands, after reaching a desirable level of revenue and public awareness, consider expanding their sales network. One of the most common options for this goal is increasing the number of branches. However, opening new branches, aside from requiring significant investment, comes with its own financial and managerial risks.
In this context, the franchise model emerges as an alternative solution. Yet at this stage, brands face several key questions:
In this context, the franchise model emerges as an alternative solution. Yet at this stage, brands face several key questions:
- Which franchise model is most optimal?
- How should profit sharing between the brand and franchisees be defined?
- How should the brand and franchisees’ contributions to advertising and marketing costs be determined?
- How can the brand monitor franchisee performance to protect its reputation from potential harm?
Method: Designing and Implementing the Optimal Franchise Model
Platin Communications and Marketing Agency facilitates the decision-making process for brands by offering a comprehensive and scientific model. This process involves the following steps:
Step 1: Brand Assessment
At this stage, detailed information about the brand is gathered and analyzed:
- Have there been any requests for a franchise to date?
- Review of ongoing expenses and investment requirements for establishing and operating an independent branch, including:
- Product cost price
- Setup and maintenance costs (rent, interior design, staffing, operational expenses)
- Revenue forecast for an independent branch compared to the franchise model
Step 2: Market Capacity and Geographic Analysis
- Assessing geographic market capacity and the demand for the product in each province
- Evaluating the possibility of multiple franchises coexisting in a single province without destructive competition
- Developing an optimal model for allocating franchises based on sales potential in each region
Step 3: Developing the Optimal Financial Model
Financial analysis of the franchise model
Comparing product costs in brand-owned branches versus franchise branches
Calculating the break-even point
The level of sales required for both the franchisee and the brand to be profitable
Defining the franchise revenue model
Examining the profit-sharing structure, payment methods, and various financial partnership arrangements
Step 4: Structuring and Monitoring Franchise Operations
To ensure the franchise model is implemented effectively, a set of operational and oversight frameworks is developed:
- Franchise performance monitoring system:
Setting standards and processes for evaluating franchisee performance - Sales model and marketing strategies:
Defining sales methods, pricing systems, and ways franchisees can collaborate in marketing campaigns - Customer loyalty programs:
Establishing joint strategies between the brand and franchisees to retain customers and increase their lifetime value - Franchisee role in marketing:
Determining the extent of franchisee participation in advertising campaigns and how costs will be shared between the brand and franchisees - Branding standards in franchises:
Creating visual and communication guidelines to maintain brand identity across all locations - Legal and financial cooperation framework:
Designing standard contracts, defining partnership terms, settlement procedures, and conditions for termination in case of non-compliance with brand standards
Outcome: A Clear and Actionable Franchise Expansion Model
With the franchise model provided by Platin Agency, brands can confidently choose their expansion path based on scientific data. This model not only includes a transparent financial and legal structure but also takes operational processes into account, enabling optimal franchise management. Through this approach, brands can reduce expansion costs while maintaining control and consistency across branches, ultimately securing a larger share of the market.
