Business models
The franchise business model
The franchise business model: other people pay to run a copy of your business under your name. Franchisees pay an upfront fee and a share of sales.
How it makes money
Franchisees pay an upfront fee and a share of sales. In return, they get the brand, the system and training, which lets a business grow with other people's capital.
Real examples
- McDonald's has most of its restaurants run by franchisees.
- Subway and many gyms and cleaning firms grow this way too.
The numbers to watch
- Sales per location
- Franchisee profit
- Share of locations that close
Who it fits
A local business that works and can be written down as a system.
What goes wrong
Weak franchisees hurt the whole brand. Franchising is also tightly regulated in many countries.
Try it this week
Write your whole operation down, as if someone else had to run it next week.
Then give it a time: one block of 90 minutes this week, in your calendar. Our playbooks have the next steps for finding your first customers.
Questions
What is an example of the franchise model?
McDonald's has most of its restaurants run by franchisees.
What is the biggest risk with the franchise model?
Weak franchisees hurt the whole brand.
Plan your first week of building it
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