Setting the fees when franchising
by
Norton Rose
The franchisor should then prepare an expansion plan for the business. This plan should realistically project the number of franchises that can be anticipated, and then calculate the likely revenue. Against this needs to be plotted the expenses of establishing the franchise and the network, including the costs of recruiting, selecting, training and supporting the franchisees. Initial and ongoing revenue should be separated so that it is clear when the franchise network becomes sustainable from ongoing revenue alone. This exercise will help determine the franchise fees a franchisor will require to make a profit.
Once these exercises have been completed, a market reality check needs to be undertaken which compares the franchise fees a franchisor would wish to charge with those charged by competitors.
See the buying a franchise and running a franchise pages for further assistance.
This article was created by Deacons and appears courtesy of Austrade . 27.06.2007
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