Building a franchise: clearly defining your offering

A successful business often offers more than it can realistically pass on to franchisees: bespoke products, additional one-to-one advice or services that depend on particular members of staff. Before expanding your existing business into a franchise network, you therefore need a clearly defined offering. The aim is not to replicate everything, but to create a reliable customer promise that independent franchisees can actually fulfil.

1. Map out what your business actually offers

Start with day-to-day operations, not your marketing brochure. Record which products and services customers actually buy, which extras your staff provide and which special requests you regularly accept. Include free services if customers see them as a standard part of your offering.

Then assess each item against the following criteria:

• Customer benefit: What specific problem does it solve?
• Resources: What skills, equipment and working time does it require?
• Dependencies: Does it rely on particular people or local suppliers?
• Commercial viability: Are the costs, time involved and revenue clearly recorded?
• Replicability: Can another business owner reliably deliver it under comparable conditions?

Distinguish proven processes from habitual ways of working. If senior management personally steps in to rescue difficult jobs, that is not yet a replicable service model. Equally, an extra that rarely sells should not automatically become compulsory simply because it has been listed on your website for years.

The result should be an overview of your offering, with a reasoned decision for each item: include it, simplify it, test it further or leave it out for now.

2. Define the core offering, optional modules and boundaries

Divide the products and services that can be replicated into three groups. This creates a clear framework for your franchise network without making every location unnecessarily identical.

The mandatory core offering covers what customers should generally be able to expect under your brand. Describe not just the names of the products or services, but also their scope, outcomes and prerequisites. In a repair franchise, for example, this might include a clearly defined diagnostic service, without automatically extending to complex specialist repairs.

Optional modules supplement the core offering where a location meets the necessary requirements. These might include specialist expertise, additional space or suitable equipment. Set out how a franchisee obtains approval and how customers can identify which locations offer the module. Blanket central advertising must not turn an optional service into something customers effectively expect at every location.

Unapproved products and services mark the boundaries of the concept. Record why something should not be offered under the brand: for example, because it has not been sufficiently tested or its delivery quality cannot be assured. Distinguish this brand rule from a blanket ban on other business activities. Such a ban raises broader legal questions.

Use this information to create a concise offering matrix. Useful columns include scope, mandatory or optional status, prerequisites, quality criteria and responsibility for approval. Franchisees should be able to understand this overview without needing informal explanations from the original business.

3. Test the customer promise in practice

Under the European Code of Ethics for Franchising, having already operated a successful pilot business is a key prerequisite for franchising a concept. When defining your offering, this means checking which products and services have actually been tested and which remain no more than ideas.

Work through typical customer jobs step by step. Where does the promised service begin, what does it include and when is it considered complete? Pay particular attention to the boundaries between the core offering and additional services. These are common sources of unpaid extra work and mismatched customer expectations.

For example, a maintenance service may include an inspection without covering replacement parts or additional repairs. If that boundary is unclear, a franchisee may price only for the inspection while customers expect a complete repair.

Ask staff to explain and deliver the defined offering using your written description. Note their questions and any situations that require improvisation. Then revise the description rather than relying on ad hoc verbal instructions to resolve ambiguities.

Also compare your offering matrix, customer information and actual processes. All three must make the same promise. Additions that have not yet been adequately tested should not be marketed as established elements of the franchise package.

4. Give the boundaries a sound legal basis

Germany has no dedicated franchise act and no general government franchise register. Franchise agreements combine elements of different contract types. The principal rules come from the German Civil Code (Bürgerliches Gesetzbuch, or BGB), alongside commercial, unfair competition, competition and trade mark law, depending on the arrangement. The European Code of Ethics is a self-regulatory instrument, not legislation.

Set out the key boundaries of the offering covered by the franchise in the agreement or in schedules clearly incorporated into it. Operational details can sit in the manual. Franchisees should be able to identify what they must offer, what they may offer and which conditions apply. Where standard-form contractual terms are used, particular attention must be paid to the rules governing standard terms and conditions under sections 305 onwards of the BGB.

Have restrictions on additional offerings reviewed by a legal adviser, especially if they extend beyond the use of your brand. Consistency does not automatically justify every restriction on independent franchisees. Public claims about your offering must also be accurate: misleading statements may breach Germany’s Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb).

Practical takeaway: Create a robust offering matrix before recruiting franchisees. Include only what is clearly described and tested in practice. Then align the agreement, manual and customer communications so that your franchise network makes the same promise and delivers it reliably.