Introduction to Franchise Business Model

The franchise business model is a popular method for companies to expand and reproduce their business at different locations. It involves a franchisor working with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Franchise business models are a popular way for companies to expand and replicate their business at different locations. This model involves a franchisor working with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Basic structure of a franchise in Australia:

Franchisor: 

The company that owns the rights to the business model, trademarks, and systems, and grants the franchisee the right to operate a business using their intellectual property. The franchisor provides training, support, and ongoing assistance to the franchisee.

Franchisee: 

The individual or group that purchases the right to operate a business using the franchisor’s intellectual property. The franchisee is responsible for setting up and managing the business, and must follow the franchisor’s system and guidelines.

Franchise Agreement: 

The legal contract between the franchisor and franchisee that outlines the terms and conditions of the franchise relationship. It covers things like the franchisor’s obligations to the franchisee, the franchisee’s obligations to the franchisor, fees, royalties, and termination conditions.

Operations Manual: 

A detailed guide provided by the franchisor that outlines the franchise system, policies, procedures, and standards. It covers everything from how to set up the business to how to operate it on a day-to-day basis.

Training:

The franchisor provides initial and ongoing training to the franchisee, covering all aspects of the business. This includes training on the franchisor’s systems, products or services, marketing, and customer service.

Support: 

The franchisor provides ongoing support to the franchisee, including assistance with marketing, advertising, and new product development. The franchisor may also provide assistance with site selection, lease negotiation, and financing.

Royalties and Fees: 

The franchisee pays the franchisor ongoing fees and royalties for the right to operate the business using the franchisor’s intellectual property. These fees may include an initial franchise fee, ongoing royalties, and marketing fees.

Termination: 

The franchise agreement outlines the conditions under which the franchisor or franchisee can terminate the franchise relationship. This includes things like breach of contract, non-payment of fees, or failure to follow the franchisor’s system and guidelines.

These are some of the basic elements of a franchise structure in Australia. Keep in mind that each franchise may have its own unique terms and conditions, so it’s important to carefully review the franchise agreement and operations manual before signing on as a franchisee.

Types of Franchise Business Models:

Franchise business models can take various forms, but here are some common types:

Single-unit franchise:

This is the most basic form of franchising, where the franchisor grants the franchisee the right to operate a single unit of their business. The franchisee typically operates within a specific territory and follows the established business model and brand standards set by the franchisor.

Multi-unit franchise:

In this model, a franchisee is granted the rights to operate multiple units of the franchised business within a defined territory. The franchisee may open and manage several locations, either simultaneously or progressively over time, depending on the terms of the franchise agreement.

Master franchise:

A master franchisee is granted the rights to develop and sub-franchise the brand within a specific geographic region or country. The master franchisee acts as a sub-franchisor and has the responsibility of recruiting, training, and supporting individual franchisees within their territory.

Area development franchise:

In this model, the franchisee is granted the rights to develop and operate a certain number of units within a defined geographic area. The franchisee typically has an agreed-upon schedule to open a predetermined number of locations within the specified territory.

Conversion franchise:

This type of franchise allows existing businesses to convert their operations into a franchise model. The franchisor provides support, training, and access to their brand and systems, enabling the business owner to transition their independent operation into a franchise.

Co-branding franchise:

This model involves the collaboration of two established brands, where a franchisee operates a business that combines products or services from both brands. This allows for cross-promotion and leveraging the customer base of both brands.

Business format franchise:

This is the most common type of franchise model, where the franchisor grants the franchisee the rights to use its entire business system, including trademarks, trade secrets, operating procedures, marketing strategies, and ongoing support.

It’s important to note that these are general categories, and specific franchise systems may incorporate elements from multiple types or have unique variations tailored to their industry and business model.

Here are some successful franchises in Australia:

• McDonald’s: One of the most recognizable brands in the world, McDonald’s has been operating in Australia for over 50 years and has more than 970 stores nationwide.

• Boost Juice: This popular juice bar franchise was founded in Australia and has over 500 stores in 15 countries. It is known for its healthy and tasty smoothies and juices.

• Subway: With over 1,200 locations in Australia, Subway is a popular fast-food franchise that specializes in customizable sandwiches and salads.

• Bakers Delight: This bakery franchise has been operating in Australia since 1980 and has over 700 stores worldwide. It is known for its fresh bread and baked goods.

• Jim’s Group: This franchise group includes a wide range of services such as cleaning, gardening, and home maintenance. It was founded in 1982 and has over 4,000 franchisees in Australia.

• Anytime Fitness: This 24-hour gym franchise has over 500 locations in Australia and is known for its convenience and accessibility.

• 7-Eleven: This convenience store chain has been operating in Australia since 1977 and has over 700 stores across the country.

• Domino’s Pizza: This popular pizza chain has over 800 locations in Australia and is known for its quick delivery and customizable pizzas.

Example  Oliver Brown: A Decadent Dessert Destination

Oliver Brown is the ultimate dessert destination, specializing in decadent dishes made from the finest quality chocolate imported directly from the world’s chocolate capital in Belgium. The Oliver Brown story began in 2009 in Belgium when two friends discovered the taste of authentic Belgian chocolate and immediately became obsessed with the flavor. Their vision was to deliver Belgian-inspired chocolates and desserts to everyone at any time across Australia and eventually the world.

The Oliver Brown experience tantalizes all taste buds, offering waffles, crepes, chocolate fondue, chocolates, coffee, drinks and shakes, as well as all of the tasty trimmings of ice cream, chocolate sauce, fresh fruit, and chocolate drops. Oliver Brown prides itself on offering high-quality ingredients by sourcing the best raw chocolate from Belgium to use in the creation of its chocolates, desserts, and drinks.

Why Franchising Oliver Brown?

Franchising Oliver Brown offers a competitive edge through the use of an established well-known brand, a broad range of products, services, and training programs, advertising and marketing opportunities, and structural and interior design support and maintenance. Unlike many global franchise businesses, Oliver Brown’s partners can access the owner of the company and discuss concerns or opportunities.

One of the reasons for Oliver Brown’s success is that it maintains the support of Oliver Brown’s intellectual property holder, In Sook Kuen. Doutmost licenses the Oliver Brown brand, logo, and other related intellectual property from Kuen, which it then sub-licenses to franchisees.

As of 2021, Oliver Brown has expanded into 4 states in Australia and 3 countries overseas, opening over 50 stores. The company continues to grow and provide delicious chocolate treats to customers worldwide.

Financials and Earnings

The financials and earnings of Oliver Brown are closely tied to the success of its franchisees. As a franchisor, Oliver Brown earns a percentage of earnings from each franchise location. This revenue stream allows the company to continually invest in research and development, marketing and advertising, and support for franchisees.

In addition to the franchising revenue, Oliver Brown also generates income through the sale of its chocolate products wholesale to other businesses such as cafes, restaurants, and supermarkets. These sales further contribute to the overall financial success of the company.

The Future of Oliver Brown

Oliver Brown is constantly seeking new opportunities for growth and expansion. The company is always on the lookout for potential franchisees who share their passion for chocolate and the Oliver Brown brand. The company plans to open more stores in the future, both in Australia and internationally, to bring the taste of authentic Belgian chocolate to more people.

In addition to physical expansion, Oliver Brown is also exploring new channels for revenue such as e-commerce and delivery services. This will allow the company to reach more customers and increase its overall revenue.

Oliver Brown Franchise: A Success Story of Global Expansion

In conclusion, franchising can be an attractive business model for those looking to start their own business with the support of an established brand and proven operational systems. Oliver Brown, a successful dessert cafe chain in Australia, offers franchise opportunities for those interested in starting their own dessert cafe business. The company provides extensive support to its franchisees, including site selection, training, marketing, and ongoing operational support. As a franchisee, you’ll have access to the company’s proprietary recipes, ingredients, and operational systems, as well as its popular brand and logo.

By following the insights from Oliver Brown, you can learn about the benefits of franchising and how to become a successful franchisee. Whether you’re a first-time business owner or an experienced entrepreneur, franchising can be a great way to start or grow your business in Australia. With the right support and guidance, you can build a successful franchise and achieve your goals as a business owner.

An example of Business for Sale

Business Code: CB1439
Price: $390,000 + Estimated SAV $10,000

Key Features: Cafe Franchise chocolate Sales $24,500 pw Beverage sales 144 kg pw

Sth West Syd, State: NSW, Suburb: Campbelltown, 2560

Location: Ideal location, with direct access to carpark, at entrance to large shopping centre in large SW Sydney regional hub. Close to major supermarket

Summary

• Features: Well established. Top franchise. Huge beverage sales. Unique menu selections. Strong local support. Excellent location. Positive management. Great hours.
• Potential: Consider longer trading hours. Explore home delivery options. Target social media. Continue current high growth strategy.
• Premises: Stunning modern fitout, with no expense spared, to create a most pleasurable cafe experience with an area of 193 sq.mts.
• Trading Hours: 7 days, Monday to Sunday: 7.00 am to 5.00 pm.
• Lease: Current lease expires 11th June 2024 + 5 year option. 4% increases. Bond 3 months. Landlord will consider extra lease term extension subject to negotiation.
• Employees: 1 Manager + 2 full time chefs + 1 casual chef + 6 casuals.
• Sale Reason: Concentrate on other business interests.
• Comments: Misc.1 = Centre fees, include Internet, maintenance and administration, Misc. 2 = Franchise fee 6.5% total. Buyer to be approved by franchisor. Security, electricity ($650) and waste disposal($75) included in rent. Coffee machine and grinder remain property of supplier. Wages do not include manger wage of $1200 pw