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Cafes and coffee shops are the daytime social hubs of cities and towns. Expanding your cafe to new locations is possible through franchising. Alternatively, you may consider franchising as a growth strategy for your business. It is essential to determine if you have a sustainable business model and understand the legal implications of franchising. This article outlines how to franchise your café or coffee shop business in the UK.
What Does it Mean to Start a Coffee Franchise or Cafe?
Franchising your café entails providing another party (the franchisee) with the right to use your café’s:
- branding;
- products; and
- business model.
The franchisee will pay you an initial payment and then ongoing fees for the duration of the operation of their franchise unit. You will not own the individual units. Instead, they are separate businesses owned by the franchisees. However, they will operate under the same name, business model, and logo as your café.
Cafe Franchises
The franchise business structure can quickly allow you to expand your café with minimal financial investment. This is because the franchisees raise their own capital to open new units.
Examples of thriving franchised café businesses in the UK include:
- Costa;
- Starbucks;
- Krispy Kreme; and
- Dunkin’ Donuts.
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Business Model
Before embarking on your franchise journey, you need to ensure you can franchise your business model. Here are some key considerations you should think about when thinking about franchising your cafe:
- whether you have a successful business model; and
- whether the business structure of your cafe is clear and replicable across multiple units.
Franchising may be appropriate for your cafe if your model can allow consistency across all units. It is essential that the food and drink taste and look the same and that the customer experience is similar in all cafes operating under your business’s branding. This helps to create customer loyalty through a reliable experience.
Legal Considerations
To franchise your café, you need to prepare a number of legal documents. Do not hesitate to ask for the help of a franchising lawyer, especially at this stage of the franchising process. These legal documents form the basis of your franchise relationships and are legally binding.
1. Franchise Agreement
The franchise agreement is the contract that defines your relationship with the franchisee and each of your responsibilities.
2. Franchise Operations Manual
The franchise operations manual details:
- how the franchisee will set up a new unit; and
- how the cafe will operate.
This manual will provide franchisees with knowledge about the operation of the business and the franchise. It will also set expectations and contain information about particular aspects of operation, such as the recruitment of new members of staff.
Market Your Café Franchise to Prospective Franchisees
It is no secret that cafes are becoming increasingly popular. There are also many cafe franchise opportunities available for entrepreneurs. Accordingly, you need to market your café franchise appropriately to possible future franchisees.
Consider what makes your café different to the others. For example, perhaps it offers a unique customer experience or a specific popular beverage. Highlight what makes your café unique and special and include this in your franchising marketing strategy.
Further Important Considerations When Franchising a Café
1. Intellectual Property
Franchising means giving another the right to use your:
- trade marks;
- name; and
- branding.
Accordingly, you must protect your trademarks by registering them and securely storing the related documentation. Also, clearly define the franchisee’s rights in the franchise agreement and operations manual.
2. Café Fittings
Café chains are known for their distinct aesthetics. Consider the fit-out and décor of your existing café and whether this is replicable in further units. As the franchisor, you can decide how you set up these units.
3. Offering Support
As a franchisor, you are responsible for supporting your franchisees. This includes providing onboarding training at the start of their franchise journey and offering ongoing support. Support could come in the form of:
- additional training to keep franchisees and their staff up to date with any changes in the café franchise;
- conducting café inspections; and
- providing assistance.
Discover the key legal and commercial issues to consider when buying a franchise.
Key Takeaways
Franchising your café means that franchisees would use your branding and business model. For this reason, an already successful business model and a clear business structure are necessary. The franchise structure can allow for the rapid expansion of your café.
Ensure consistency across units; this is important for customer loyalty. Legal documentation must carefully set out aspects such as the consistency across units and the responsibilities of both you and the franchisee. Legal documents, such as the franchise agreement, are necessary to franchise your café, and a franchising lawyer can help you to prepare these documents.
If you require legal advice with franchising your cafe, 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 0808 196 8584 or visit our membership page.
Frequently Asked Questions
You must firstly consider whether your business model can feasibly be franchised. If it can, then you must prepare the relevant legal documents such as the franchise agreement, franchise operations manual, and the franchise disclosure document. You must also prepare to market your cafe franchise to prospective franchisees.
You can ensure consistency across your franchise from the outset of your franchise journey. Ensure that expectations are clearly defined and that you create programs of training and ongoing support.
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