Franchise in Poland

Service Business

More and more private companies have been established in Poland since the system transformation. Importantly, even people who do not have professional knowledge of entrepreneurship, management or accounting can try their hand at business. An interesting idea is a franchise - your own business under the wings of a more experienced partner.

What is a franchise?

The concept of franchise is derived from the English word franchise, meaning a concession and denotes a certain type of agreement between the parties and the sales system. On the one hand, there is a franchisor - an enterprise that grants a license to a contractor, i.e. a franchisee.

At the time of cooperation, the franchisee undertakes to run his company under the trademark or trade name of the franchisor, using the principles, techniques and know-how adopted by him. On the other hand, the franchisor provides training, ongoing support and all know-how. It is responsible for the preparation of a person who has not been qualified in a given activity so far, so that they can cope with running a business on their own.

Franchise agreement

In order for the franchise relationship between contractors to exist, the parties must conclude an adequate agreement. These types of documents are regulated by the provisions of the Civil Code - in accordance with its provisions, the franchise agreement is subject to the principle of freedom of contract. This means that it can be created in a relatively flexible manner. The condition is compliance with the provisions of Art. 353 of the Code, according to which the parties may arrange the legal relationship at their own discretion, as long as its content or purpose does not contradict the properties of the relationship, the law or the principles of social coexistence.

Flexibility in creating a franchise agreement is also dictated by practical aspects - such relationships are concluded in various industries, requiring - due to their specificity - different provisions. Therefore, it would be difficult to create a single, universal and comprehensive document for all interested parties. However, you can define some general aspects that are most often included in franchise agreements and are the most effective.

Thus, the document confirming the conclusion of a franchise agreement usually begins with a preamble. This is where the parties, their intentions and values ​​are identified, and the assumptions are related to the actual situation of the companies. It is also worth including definitions of specialist terms that will be used later in the contract.

Another necessary element is the described stages of cooperation between the parties. In theory, they are divided into three groups - regarding the conclusion of the contract itself, describing the rights and obligations of the parties during the term of the contract, and those regarding the possibilities and rules for terminating the contract.

Franchisers very often try to define in the contract provisions protecting them. The first concerns the prohibition of disclosing inside information.There is nothing strange about it - it should be remembered that the franchisor is obliged to share his know-how with another company. Therefore, the prohibition of disclosing and copying company data without its consent and knowledge is regulated under the contract. Most often, there is also a provision here that obliges the franchisee to provide instructions on the company's confidentiality to employees.

The second detail specifies when and how the franchisee may use the partner's name, logo and trademarks. At this point, entrepreneurs most often protect themselves against the possible use of these values ​​after the end of cooperation.

At the same time - despite the aforementioned flexibility in drawing up a franchise agreement - there is a group of clauses that are obligatorily prohibited. The first concerns the franchisor's imposition of resale prices for goods or services. In this situation, it is only possible to determine the maximum height of the assortment to be offered to recipients and suggest the optimal height. The franchisor cannot, however, set a minimum price or impose a fixed rate from above.

The second prohibited clause concerns the limitation of the franchisee the range of customers to whom he can offer goods or services. It is about a situation when a customer who, as a rule, lives and supplies himself permanently from another franchisee or franchisor, goes to the point of sale of a given seller. On the other hand, the provision that can be introduced is the prohibition of active sales in the territory of these entities - therefore, you cannot, for example, send leaflets to customers from a territory that is assigned to someone else.

Advantages and disadvantages - is it profitable to be a franchisee?

Franchising is very popular not only at the beginning of an adventure with business, but for some reasons it is the starting entrepreneurs that should be most interested in this model.

First of all, a company in a franchise network does not require as much capital as a completely independent enterprise. Yes, there is still a need for premises or staff, but there is no need to allocate funds to build a new brand from scratch. The franchisee relies on the logo, name as well as the reputation of the senior partner. Thus, it is the franchisor that provides marketing facilities, employs specialists and makes efforts to effectively advertise its brand.

The second important aspect is knowledge and experience. By concluding a franchise agreement, the franchisor undertakes to comprehensively train his new partner. They must become familiar with the use of specialized equipment, recruiting employees, keeping accounts, etc. The scope of such training should include everything that will allow the new entrepreneur to become an expert in the field in which he will work. Of course, the comprehensiveness of the course is limited to one specific industry - the franchisor will not provide the contractor with training in all recruitment or production methods, but only teach him those that are necessary in his company.

The franchisor's substantive support does not end with the first training. During the entire period of cooperation, the franchisee can count on help and support. It may consist in constant telephone contact with specialized advisers, the possibility of an agreement with other franchisees or regular visits with field staff, whose task is precisely such assistance and control.

Thanks to the support and substantive knowledge, the franchise is a perfect solution for entrepreneurs who plan to change the industry. In such a situation, a great advantage of the franchisee is the experience in running a business, which will be supplemented with industry knowledge.

Another advantage, very important from the point of view of the franchisee, is profits. When setting up a new business on his own account, the entrepreneur must be aware of the fact that initially he will suffer a loss, and the possible profits will not be overwhelming either. You always have to take into account the risk of failure and bankruptcy. On the other hand, in the case of a franchise, when a well-known and respected brand stands behind a new company, the fear for development is much lower. Since there is no need to appear on the market, profit may appear already in the opening period. Especially that - as already mentioned - the advertising of this new point is also done by a group of specialists employed by the franchisor.

Franchise - although it is an extremely interesting and attractive model of running a business - also has some disadvantages. The first is from control and interdependence. From the economic and legal point of view, the franchisor's company and the franchisee are separate entities, in practice, however, there is the aforementioned control. Due to the fact that the franchisee shares his brand and resources, such a relationship is not surprising. However, this does not change the fact that it can be perceived as onerous.

Likewise, the franchisee's decision-making power is also somewhat reduced. He cannot freely reorganize his enterprise or introduce innovations. In order to make significant changes, it is necessary to contact the franchisor and determine the scope of possible modifications.

Franchise in Poland

The number of franchise outlets in Poland is constantly increasing. However, differences appear due to the industries in which such relationships are established.

According to the PROFIT system report from the end of 2012, the highest growth was recorded in the food and catering industry. On the other hand, the banking, accounting and real estate sectors recorded a stagnation or decline. The largest decline was recorded in the clothing industry, but nevertheless it remains at the forefront of franchise networks in Poland.

Forecasts for the coming years are quite positive. As the number of franchise outlets continues to grow, in general, specialists assume further development of this model in Poland in the coming years.