Franchising is a proven business model enabling entrepreneurs to operate under an established company’s brand and guidance. The term “franchise” comes from French, meaning privilege or freedom, aptly describing how franchisees can own and direct their businesses while receiving support from the franchisor.

This business model traces back to the mid-19th century when Isaac Singer developed a franchise system for distributing and repairing sewing machines. However, franchising truly flourished in the mid-20th century with the rise of companies like McDonald’s and Marriott. Today, franchising spans numerous sectors including retail, healthcare and many more.

The franchising relationship typically works through a Franchise Agreement where the Franchisor grants rights to the Franchisee to operate using their brand name, systems and support. In exchange, the Franchisee pays an initial fee and ongoing royalties. This arrangement allows Franchisors to expand their reach without directly managing every location, while Franchisees benefit from running their own businesses with reduced risk.

Tried and tested business processes bundled with an established brand make franchises attractive business opportunities. However, insurance is often excluded from this “business-in-a-box” model, leaving franchisees to bear this risk alone.

Without proper risk and insurance guidance on what can be a complex undertaking, franchise owners risk missing crucial cover that could make or break their business.