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Wednesday, June 10, 2026

Determining your franchise business model: the keys to successful development

At the Franchise Expo Paris, two franchise experts, Julien Souffi (Franchise and Digital Expert at Franchise Board) and Lionel Lefebvre (Partner at the law firm Hubert Bensoussan et Associés), shared their insights on the essential elements to master before launching a franchise network. Their main message was clear: transforming a concept into a franchise is not simply about replicating an existing business, but about building a genuine economic, legal, and organizational model that can be passed on to other entrepreneurs.

Franchising is based primarily on a competitive advantage.

According to Julien Souffi, the first question a future franchisor should ask themselves is not how much they will earn, but how they will make their franchisees competitive in their market.

The franchisor's role is to provide its franchisees with the means to replicate a proven success model. This transfer is based on several components:

a recognized brand;
operational know-how;
initial training;
ongoing assistance;
computer tools;
communication devices;
possibly a purchasing center.

The goal is to build a "win-win" relationship in which the franchisee benefits from an advantage they would not have obtained on their own, while the franchisor is compensated for the services they provide.

There is no legal obligation regarding entrance fees or royalties.

Lionel Lefebvre reminds us of a fundamental point: contrary to a widespread idea, there is no "franchise law" imposing a specific financial model.

The law does not require a franchisor to collect:

an entry fee;
royalties;
royalties;
training fees.

These elements are freely determined by the parties.

In practice, however, most networks plan to:

an entry fee intended to remunerate access to the concept, the brand and initial training;
periodic fees intended to finance ongoing assistance.

But some networks adopt other remuneration models, particularly when they generate their revenue through the sale of products or the management of a purchasing center.

The entry fee must be based on economic logic.

According to Julien Souffi, a franchisor rarely waives the entry fee without a strategic reason.

This generally allows for the remuneration of:

access to the brand;
the transmission of know-how;
initial training;
start-up assistance;
information systems;
the launch communication.

However, some exceptions exist.

In distribution franchises (kitchens, furniture, home equipment, clothing), remuneration can mainly come from margins made on products sold.

In certain sectors where member renewal is important, such as real estate agent networks, entry fees may also be low or even non-existent.

The question is therefore not what can be charged, but what the franchisee actually earns from the proposed system.

All remuneration must correspond to a real exchange.

One principle comes up constantly in discussions: no fee should be disconnected from the services rendered.

A franchisor who charges:

software;
management tools;
dashboards;
assistance;

must indeed provide these services. This logic is essential to maintaining the trust of franchisees.

Experts also point out that the services provided by the franchisor are becoming increasingly important thanks to digitalization:

data analysis tools;
performance monitoring;
CRM;
collaborative platforms;
Automated marketing solutions.

These services enhance the network's competitive advantage and justify the fees collected.

The business model must be built on the profitability of the franchisee.

To determine the amount of the entry fee or royalties, the stakeholders insist on the need to carry out a genuine financial modeling.

The process involves establishing:

the projected turnover;
purchases;
personnel costs;
operating costs;
the services provided by the franchisor.

The idea is to verify that the franchisee will be able to generate satisfactory profitability despite the royalties paid.

Julien Souffi specifically mentions a rule often used in the sector: the personal contribution invested by the franchisee should be recoverable thanks to the results generated around the third year of operation.

Therefore, the price demanded by the franchisor must always remain consistent with the value created for the franchisee.

Franchising is based on a logic of pooling resources.

One of the major advantages of the model lies in the pooling of costs.

An independent entrepreneur should finance the following on their own:

the creation of a brand;
computer tools;
marketing campaigns;
the training;
purchases.

Within a network, these costs are distributed among all members.

The franchisor, specializing in these functions, can offer them at a cost far below their actual value.

It is precisely this pooling of resources that explains the economic performance of many networks.

Transparency has become indispensable

Both experts strongly emphasize the concept of transparency.

Today, economic data is much more accessible than before:

company accounts;
performance of points of sale;
operating ratios;
financial indicators.

In this context, a franchisor must be able to explain clearly:

what he charges;
why he charges for it;
what the franchisee receives in return

This transparency fosters trust and reduces the risk of conflict.

The Pre-contractual Information Document (DIP) plays an essential role in this logic of sincere and fair communication.

Purchasing and supply constitute a strategic lever

Beyond entry fees and royalties, supply often represents a significant source of revenue for the franchisor.

Two main models exist:

The purchasing center

The franchisor:

buys or manufactures the products;
resells them to franchisees.

It achieves a margin that must remain reasonable while allowing franchisees to benefit from advantageous conditions.

The central referencing system

The franchisor:

negotiates the terms of purchase;
selects the suppliers;
reference the products.

Franchisees order directly from suppliers.

In this case, the franchisor can receive commercial cooperation fees from suppliers.

These mechanisms must be clearly stated in the contracts in order to avoid any subsequent disputes.

Support is at the heart of the franchise agreement

For stakeholders, support is probably the most important characteristic of the franchise.

It operates on two levels.

Before the opening

The franchisor supports the candidate in:

his training;
the search for premises;
the design of the point of sale;
the preparation for the opening;
the launch communication.

After the opening

The support becomes permanent:

performance analysis;
network animation;
continuing education;
corrective action plans;
sales support.

Digital tools now allow for extremely precise monitoring of each franchisee's activity.

The contract must clearly define the commitments

All promised services must be clearly detailed in the contract.

This must specify, in particular:

the duration of the training courses;
the number of days of support;
the frequency of visits;
the monitoring procedures;
the tools made available.

This formalization protects both the franchisor and the franchisee.

It also helps to avoid disappointments related to poorly defined expectations.

There are several development models

Traditional franchising is not the only solution.

The speakers mentioned several variations:

Lease management

The franchisor retains ownership of the business and entrusts its operation to a candidate.

Participatory franchising

The franchisor invests alongside the franchisee to facilitate project financing.

Hybrid models

Some retailers combine several revenue streams:

franchise;
real estate ;
equipment rental;
software services.

McDonald’s is cited as an example of a model combining franchise activity and real estate strategy.

The choice of model must stem from the entrepreneurial vision.

For Lionel Lefebvre, you should never start with law or contracts.

The first step is to understand:

the leader's vision;
its objectives;
its growth ambitions;
the specifics of its activity.

The legal and financial work then comes into play to translate this vision into a coherent architecture.

Franchising is ultimately just a means to an end, serving a broader entrepreneurial project.

The franchisee is primarily looking for a credible project

When a candidate compares several networks, the amount of investment is not their only decision criterion.

Experts point out that he is also looking for:

a community of values;
a relationship of trust;
a high level of support;
a credible return on investment.

A network that charges more but provides more services may be perceived as more attractive than a cheaper but less structured network.

The key point remains the consistency between the cost charged and the value provided.

Becoming a franchisor represents a real career change.

The conclusion of the exchange is particularly interesting.

Creating a network implies a profound transformation of the role of the entrepreneur.

He passes:

from "doing" to "having it done";
from direct exploitation to support;
from customer contact to network management.

This transition requires:

new skills;
new tools;
specialized support.

Experts estimate that a franchise project typically requires an initial investment of between €25,000 and €50,000 to establish the network's foundations. However, ambitions for rapid growth may demand significantly more resources.

The main takeaway from this conference is that there is no universal business model for franchising. Each network must build an architecture tailored to its business, its objectives, and the needs of its future franchisees.

However, some principles remain essential:

to create a real competitive advantage for the franchisee;
establish remuneration consistent with the services rendered;
ensure full transparency on performance and costs;
formalize the commitments precisely in the contracts;
to build real and sustainable assistance;
anticipate the human, financial and organizational resources needed for the development of the network.

The success of a franchise network thus depends less on the collection of entry fees or royalties than on the franchisor's ability to create a reproducible, profitable and sufficiently efficient system to allow its franchisees to succeed sustainably.

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