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How do I franchise my business

Some of the most important issues and questios about franchises, answered by our Romanian lawyers.

What is a franchise?

The franchise is in fact an operation, a contract whereby the franchisor (the franchising company) grants the franchisee the right to use his / her intellectual / industrial property to produce or market certain types of services / products. The franchise system involves the payment of an entry fee by the franchisee to the franchisor, as well as the payment of annual fees (percentage of turnover – usually).

The primary benefit of this system is that you will take over a successful business and the entire implementation, management and development business of this business, with everything you need to get started. The areas where you can buy franchises are many: construction, fitness, health, service and car rental, computer trade and commerce, sports betting, training, education, ecology cleaners, restaurants and cafes, etc. These areas may be regulated through special licensing. The team of experts at our law firm in Romania can provide more details.

In addition to the avant-garde of getting a turnkey business, there is also an avant-garde in exploiting a well-established and well-known brand where you will enter a competitive market that already has production, marketing and marketing techniques that work and have been perfected over time, high profitability. On the other hand, the main disadvantage is the initial investment in the franchise tax and the annual fees that will lead to the franchisor’s profit reduction. On this line, the franchisee is bound to meet the quality standards of the products / services traded.

Franchise fees may be between € 400 and € 40,000 and pay only once when signing the franchise contract. Fees are set by the franchisor, and they may represent the fixed amount or percentage of turnover (approximately 5%) and are paid according to the monthly, quarterly or yearly contract. The agreement can be reviewed by our lawyers in Romania.

Our team can also answer questions about real estate and property law matters, such as the situations in which a foreign national is permitted to buy land in Romania. While property purchase for commercial or residential purposes (apartments, homes, shops, storage or industrial spaces) is permitted, land purchase is subject to a set of rules that can be explained by our team of lawyers.

How do I franchise my business?

Looking from the franchisee’s perspective, things are pretty clear and easy to understand, but there are very few questions from those who are a successful company and want to expand as a franchise. Well, it is the most beneficial way you can expand your business, because instead of investing in a new business point of your business in another city you can sell franchises and thus earn money, and you can also have an annual profit (through royalties) without you having to deal directly with that new working point.

Below, our Romanian lawyers present the step by step guide on how you can franchise your business:

  1. The first aspect, and most importantly, is to know your business and all the news in your field. In order to grow permanently, you have to learn everyday and be aware of what is today, not just the moment of opening the business.
  2. Then you need to know your target market, all your potential customers. It is recommended to make a profile of your prospects: age, gender, interests, shopping budget, how informed you are about keeping your brand and about your offer.
  3. Continually improve your product or service range, make them the best on the market and always emphasize the benefits to the customer. It’s easy to systematize your business and create a successful plan: useful and unnecessary marketing methods, cost-cutting details, employee training and motivation. (This is where a franchise is actually sold, because of this plan, investors will be interested in buying your business.)
  4. Start promoting the franchise to potential investors

The experts at pur Romanian law firm can give you more details about each of these steps.

Following this plan, you can monetize your business by earning a percentage of your franchisee’s profits that you will need to take care of, providing them with all the information and support they need to make them profitable, so you can earn the set percentage. On the other hand, you can go through the simple way you sell them a franchise on a system entry fee and no longer charge commission annually, leaving the business to the full of the beneficiary. There is, of course, the option to leverage a fixed monthly fee to further benefit from information and support from keeping it. Of course, the 3 can also appear in different combinations, at your liking.

Contact our lawyers in Romania for complete assistance when franchising.

by Cristian Darie