Franchise Business – Start-Up Consulting

Franchising is a method for expanding business and distributing goods and services through licensing. In this business, the franchisors – a person or company that grants the license to a third party for the conducting of a business under their banner. They provide them with an operating system, brand, and support.

Franchise and Its Benefits

There are benefits for both the franchisor and the franchisee in this business. Franchisors are able to use other’s resources to expand the brand more rapidly, which otherwise would have taken much more time, money, and energy. In fact, franchising their business only helps them to enhance their brand value without taking financial burden or by letting the outsiders control the operating system.

What to Expect from a Franchisor

The initial franchise fee and ongoing royalties are what a franchisor will collect to achieve the desired brand value. They also fund the operations at corporate headquarters, train and support franchisees, market and advertise the brand, improve the quality of goods or services, and hence, build the brand in the market.

Benefits of a Franchisee

On the other hand, Franchisees also avail their share of benefits. The benefits include a higher chance of success than in a sole proprietorship, lesser time for initial set up and training, and ongoing support. They also get assistance in finding the correct location, lower costs through group purchasing; use of an established business model and brand, national and regional advertising campaigns; customer lead generation through websites and centralized call centers, etc.

Franchise – Not a Bed of Roses

However, one must also vary of few hitches which are inevitable in a franchise business. For creative people it is the lack of independence, from the goods and services they sell to the color of the paint on their walls can be a major obstacle. Other things that might pull you down are mandatory company-wide promotions that may not work in your market (price cuts, new products, or services) still you need to spend money to implement the strategies suggested by your franchisor. Other unavoidable and sometimes undesirable costs include a redesign of their unit.

Understand the “Franchise System”

“Follow the system” is the main requisite for franchising business. The operating system of the franchise brings in success and profit if followed properly. Smart franchisors can sometimes accept your suggestions or take into consideration the local or regional variations from their franchisees. Still then, franchisee departing from the “system” without the franchisor approval might risk violating the terms of the franchise agreement. There is also an agreement from the Franchisees’ side that they agree to keep the franchisor’s proprietary system and trade secrets confidential.

Franchising is not for everyone, especially for those who need total independence to succeed or fail on their own. It is for those who have a preference for tradeoffs found in working for a larger organization. Another way of seeing it is that franchising is a commitment very much like a marriage. A good match between franchisor and franchisee, and by sharing mutual goals over the long term will determine the success of each franchise unit. This alone will increase the brand value of the product –and hence – will benefit both the franchisor and the franchisee.

Starting a Franchise

Find out a detailed listing of leading franchise opportunities from some franchise website or franchise magazine offering directory services.

Choose an option in which you have an interest and inclination. The next step is to opt for the best location. Carefully analyze the business perspective and also opt for a serious phase of discussion to understand every element of the business plan. Now is the time to understand the legal agreement and to take help from a lawyer to understand the consequences and then move forward with the signup. Planning your finance is also crucial, be prepared for sudden expenses as discussed above.

Be informed, plan wisely, and franchise happily.

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