You may have heard about the rising prevalence of travel franchises in this time of professional instability but flourishing tourism. But how does the travel franchise agency business model work, and what is the relationship between franchise owner and franchisee?
In this article, we’ll provide some information about the technical setup of the travel franchise system, giving you the details and insight you need to determine whether it’s something that might interest you.
You borrow branding but work independently
In the franchise model, you use the branding, support and back-office systems of your franchise owner, but operate your franchise however you see fit beyond that. You get to decide what types of travel packages you want to offer, and in what locations, and to what prospective clients.
You can also choose how hard (and how often) you work. If you want to take a couple of months off, as long as your franchise fees are covered, it’s absolutely up to you. That kind of freedom and self-determination is perhaps the greatest motivator behind travel franchising; you can work 20-hour days to make huge sales one week, and then kick back and relax the next.
There are three common costs
To establish and run a travel franchise, you typically need to think about three costs: the franchise fee, the management fee, and the commission fee.
The franchise fee is the startup cost. It’s the lump sum of money you pay to the franchise owner to license their brand and resources. It can be a fairly large amount (it depends on the exact nature and scale of the arrangement), but you only have to pay it once.
The management fee is an ongoing cost that covers a large assortment of services the franchise owner carries out for you. This could include keeping your website live and maintained, handling indemnity insurance, and ensuring that you are registered with all the required authorities.
The commission fee is entirely straightforward; for every booking you make, you will only get to keep a certain percentage, with the rest going to the franchise owner. Note that while we have listed this as a fee, it technically isn’t a fee. The sales you make are essentially on behalf of the franchise owner. Instead of yielding 30% of a sale, you’re making a 70% commission.
You’re only as good as your franchise owner
Even though you work independently from your franchise owner, you will be bound by that borrowed branding. It’s extremely important that you invest a lot of time, effort, and thought into choosing a brand that will stand up to scrutiny and lend you the stability and credibility you need to establish your franchise.
That’s why a travel agency franchise like Explorer Travel is the sort of business you should be looking at. Having been operating since 2005 as the very first UK-based travel franchise, this agency has carefully cultivated an impressive and consistent professional record. If you partner with an agency like theirs, you’ll have a great chance to succeed. If you choose poorly and partner with a low-quality agency, the branding will only serve to sabotage you in the long run.
If franchising is something you think you might like to pursue, weigh up your options thoroughly. There are plenty of great travel franchises of all varieties out there, but also a lot of very questionable ones, and you won’t always be able to tell at a glance which kind you’re dealing with. Speak to them directly, learn about how they work, and make the best call you can.