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Franchising can be an excellent way to grow your business in multiple industries. However, establishing a franchise system is quite an intensive and complicated process, so you need to research accordingly. Therefore, this article will provide some background and explain how you can franchise your delivery business.

What Is a Franchise?

A franchise is a model for expanding your existing successful business. You (the franchisor) recruit other people (franchisees) to set up and run a business based on yours, using your intellectual property, processes and systems, in different locations. You manage the overarching business while they manage their local operations’ day-to-day running.

Well-known franchises in New Zealand include New World, The Coffee Club, Paper Plus, and Subway.

As the franchisor, you provide support and resources for your franchisees to promote their growth and success. What this support looks like will depend on how your business operates and the style of franchise you wish to run. Some examples include providing franchisees with the following:

  • staff training;
  • product sourcing;
  • operating systems and documentation;
  • equipment, or nominating suppliers for the equipment;
  • business know-how;
  • trade secrets; 
  • intellectual property, including the trade mark; and
  • other resources or support necessary for the operation of your business.

In return for being provided with these things, franchisees will, in most cases, pay you an initial startup fee and ongoing franchise fees. Franchisees earn their income from operating a business under your brand name. Notably, franchises can exist in many industries, but you need to consider whether the design of your delivery business is suitable for the franchise model.

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Benefits of Franchising

Turning your delivery business into a successful delivery franchise will be an intensive process and not one that you should consider lightly. It is a long term commitment. However, if you develop your franchise well, you can take advantage of the benefits that this system provides and expand your existing business. Some particular benefits include:

  • using your franchisees’ labour, capital, and know-how to grow your own business and promote brand recognition;
  • freedom to focus on the core of your business rather than its day to day operation;
  • the ability to access new markets and locations without the risks of new operations, as your franchisees take more of those on;
  • franchisees that are dedicated to growing their own business, which in turn benefits your overarching franchise; and
  • the combined knowledge of franchisees may provide valuable insights into their local markets.

For instance, recruiting franchisees that know their local area and the buying habits of local customers would be extremely useful for your delivery business. They may have insights and be more familiar with the geographical makeup of particular locations that you do not. As a result, this can allow for faster delivery times and other benefits.

However, you can only reap the rewards of these benefits if you set up your franchise correctly.

What Do I Need for a Franchise?

Before starting a franchise, you need to ensure that your business is ready for it. First, you need to have a successful pilot operation. Therefore, your business should have a point of difference that makes you successful, which your franchisees can replicate. This could be how you organise and plan your deliveries or the style of products you deliver. Consider what niche you can fulfil in the market, and capitalise on that.

From a legal perspective, it is also important that before franchising, your brand is protected, including through the registration of trade marks. 

Additionally, you need to consider what makes your franchise attractive to franchisees. This fact will play into your recruitment strategies. Consider what franchise style you wish to create, including whether you want to give franchisees more or less control. Franchisees may prefer franchise opportunities with certain aspects, such as:

  • good work/life balance;
  • a business with a proven successful track record;
  • flexible hours;
  • working from home arrangements;
  • fair wages;
  • membership of the Franchise Association of New Zealand (FANZ); and
  • secure contractual relationships.

Crucially, you need to set out the terms of your relationship and other information in important documents, such as a:

Franchising a Delivery Business

Regarding your delivery business, how you franchise it will depend on what aspect your franchisees will replicate. You will also need to consider what support you will give them and what resources. For example, will you provide branded company vehicles for deliveries? Or will franchisees have to use their own vehicles? If you operate through an app or website booking system, this could allow for greater opportunities for franchisees to work from home, which may be more attractive for some.

What works for one franchise may not necessarily work for another, so you need to research what works for your particular market. Then, engage the aid of a franchise expert, who can give you tailored advice based on the unique position of your business.

Key Takeaways

Turning your delivery business into a delivery franchise can be a good way to grow your business and find new clients. First, however, you need to ensure your business is franchise-ready and appropriate for this model. This process requires good planning that tailors to your unique situation.

If you need help with franchising your delivery business, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

What is a franchise?

A franchise is a business model that you may use to grow your business. You, as the franchisor, allow other parties, the franchisees, to replicate your business operations to create their own success. In return, you grow your brand and receive various fees or royalties.

How can I franchise my delivery business?

You need to determine what locations have a demand for the deliveries you provide. Then, find franchisees in that area, and determine the ongoing support you provide them.

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