What is a franchise?

A franchise is a business model where a company (the franchisor) allows someone (the franchisee) to open and operate a branch of their business using the brand, products, and support they provide.

The franchisee gets to run their own business but benefits from the established brand, proven systems, and ongoing support that the franchisor offers. In exchange, the franchisee pays fees or a percentage of their profits to the franchisor.

In other words, owning a franchise allows you to start a business with the backing of an already successful brand, which can make it easier to attract customers and reduce the risks of starting a business from scratch.

A franchise is a business opportunity and not a job. 

There are a few financial considerations when being part of a franchise, these are the initial franchise fee and then an ongoing monthly management service charge (MSC).

What is a franchise fee?

A franchise fee is a one-time, upfront payment that a new franchisee makes to the franchisor when they first join the franchise system. This fee gives the franchisee the right to use the franchisor’s brand, business model, and intellectual property (like trademarks, logos, and business processes) to operate their own franchise location.

In simple terms, the franchise fee is like a "licence" to run a business under an established brand. It helps cover the cost of initial training, opening support, and setting up the franchisee to get started. After paying this fee, franchisees are often required to pay ongoing royalties or service fees, but the franchise fee itself is typically a one-time cost.

What is a Management Service Charge?

As a franchisee, you'll contribute financially to the franchise by paying a monthly Management Service Charge. This fee helps cover the ongoing support, training, and resources provided by the franchisor to ensure your business operates smoothly. The charge helps with things like marketing, operational support, and regular updates to systems that keep the franchise running efficiently.

This monthly fee is an essential part of the franchise relationship, as it ensures that you continue to receive the tools, guidance, and services needed to help your business succeed.