What's the catch with a franchise without a lump sum fee?
Posted: Mon Jan 06, 2025 3:30 am
Moreover, even within the same franchise, the payment amount may not be the same. The difference may be in the set of services: the more services are included, the higher the price. Another option is differences in payment due to location. This is similar to how prices for dentistry or IT services in Moscow are higher than in other cities.
Now let's look at the situation from the franchisee's point of view. The main idea is that too small a fee under the franchise agreement should alert him.
Why is this? Most likely, it means that the franchisor bangladesh phone number lead may not provide all the necessary services or expects to sell a lot of franchises quickly to earn money on the initial payments. In this case, he may not expect serious development of his franchisees.
To put it very simply, all franchise sellers can be divided into two categories :
Those who earn on a lump sum payment do not care how their brand will develop after the sale.
Those who receive their primary income from royalties are willing to invest more effort in supporting and training their franchisees to help them grow and modernize.
Therefore, if the initial amount is too small, the buyer should better study the terms in more detail. Make sure that he is offered everything necessary and that everything is legally clear.
Sometimes franchises are sold without a lump sum fee, although this is rare. In this situation, the franchisee pays only a monthly royalty.
Example : A small company that makes custom-designed shoppers may offer this model. Their brand is not yet well-established, and they want to check whether there is demand for the product, while risking their own funds as little as possible. In this case, the franchisor may offer to purchase a franchise without an entry fee, but with the condition that there will be regular royalties later.
For the franchisor, this is risky: he does not receive income immediately, and the product may not catch on, and then he will not see royalties. The biggest danger is that if the quality of services at the new point turns out to be low, this will spoil the brand's reputation. With the initial payment, the franchisor will at least have money to minimally compensate for possible consequences.
For the franchisee, the lack of payment is a plus: it allows you to save money and invest it in promoting the outlet. Instead of paying, say, 300 thousand rubles right away, you can use this money to attract customers, advertising and current expenses.
If the question arises, is there a franchise without a lump sum and royalties - unfortunately, no. Otherwise, the franchisor would not earn anything at all, and then why run such a business?
Now let's look at the situation from the franchisee's point of view. The main idea is that too small a fee under the franchise agreement should alert him.
Why is this? Most likely, it means that the franchisor bangladesh phone number lead may not provide all the necessary services or expects to sell a lot of franchises quickly to earn money on the initial payments. In this case, he may not expect serious development of his franchisees.
To put it very simply, all franchise sellers can be divided into two categories :
Those who earn on a lump sum payment do not care how their brand will develop after the sale.
Those who receive their primary income from royalties are willing to invest more effort in supporting and training their franchisees to help them grow and modernize.
Therefore, if the initial amount is too small, the buyer should better study the terms in more detail. Make sure that he is offered everything necessary and that everything is legally clear.
Sometimes franchises are sold without a lump sum fee, although this is rare. In this situation, the franchisee pays only a monthly royalty.
Example : A small company that makes custom-designed shoppers may offer this model. Their brand is not yet well-established, and they want to check whether there is demand for the product, while risking their own funds as little as possible. In this case, the franchisor may offer to purchase a franchise without an entry fee, but with the condition that there will be regular royalties later.
For the franchisor, this is risky: he does not receive income immediately, and the product may not catch on, and then he will not see royalties. The biggest danger is that if the quality of services at the new point turns out to be low, this will spoil the brand's reputation. With the initial payment, the franchisor will at least have money to minimally compensate for possible consequences.
For the franchisee, the lack of payment is a plus: it allows you to save money and invest it in promoting the outlet. Instead of paying, say, 300 thousand rubles right away, you can use this money to attract customers, advertising and current expenses.
If the question arises, is there a franchise without a lump sum and royalties - unfortunately, no. Otherwise, the franchisor would not earn anything at all, and then why run such a business?