Like any other business establishment also, the franchising also is the so-called „royal road of independence”, but it is no automatic guarantee of success. It may happen that the new company cannot win.
Problem with this situation is the fact that a franchisee can only partially respond to changes in the market. This is in part also because the franchisee is upon signing indeed is “independent”, but he is not “autonomous” businessman.
By the form of distribution of franchising the business founders is actually for “independent trader”. However, unlike a business that is based with a business idea a company, the franchisee has either no or only very little say regarding the products or their estimated prices. On this point, he is in some way by his franchisor “dependent“. This is particularly problematic if the sales figures of the new franchise branch fall short of targets. A sole proprietor may seek in such a case, its product or service offerings to better adapt to the market situation and demand.
The German Society for Consumer Protection has on this issue has a comprehensive database with exemplary judgments on disputes from the franchise law. This directory also offers the opportunity to look in doubt about the accuracy of certain contractual clauses for precedents. The website is, however, primarily for informational purposes and replaced by no means a personal consultation with an attorney. In addition to the most precise examination of the contract documents, you should consider in your search for the right franchise system the following aspects into consideration:
How is the quality of the offered me marketing material assessed?
- What in my target area is the expected demand for the products offered by the franchisor?
- Does the franchisor provide a good and extensive training and professional development program?
- What support do I get before, during and after opening my business from the franchisor (for site selection, marketing, customer acquisition and management in, etc.)?
- To what extent does the fee structure of the franchise system on my expectation of profit from (me, after deduction of ALL costs are still living from my business)?
- To what extent does the fee structure of the franchise system on my expectation of profit from me, after deduction of all costs, are still living?