CHOOSING A FRANCHISE

CHOOSING A FRANCHISE

 

Introduction
Franchising is a means of starting and running
your own business
with a very high success rate:
 providing you choose a good franchise in the first place.

A good franchise

will offer you
a proven business format with the initial
and continuing support that you will need.
Your business will work under the brand
established by your franchisor,
 using the business system
they have developed and proven in the marketplace.

You will pay an initial fee to set up
using the brand and the proven business format,
 and you will pay continuing fees for the support
that will keep you in business earning profits
on the trade that you do,
and building a capital asset that you can re-sell.

There are a number of step by step systems
in place to enable prospective franchisees
 to narrow down the large number of opportunities out there.
Whilst there is no guaranteed fit
to personal circumstances
 it is important that your search
for the right franchise has some structure to it so that
 you are not just using your instincts.

WHAT IS FRANCHISING?

 

The term 'franchising' has been used
to describe many different forms of business

 relationships, including licensing,

distributor and agency arrangements.

The more popular use of the term has arisen from

 the development of what is called

'business format'


Business format franchising is the granting

 of a license by one person (the franchisor)

to another (the franchisee),

 which entitles the franchisee to trade under the

 trade mark/trade name of the franchisor

and to make use of an entire package,

 comprising all the elements necessary to establish

 a previously untrained person in the business

 and to run it with continual assistance on a predetermined basis.

The principle is simple -

 some companies choose to grow,

not by developing in the conventional way,

but

by granting a license to others to sell their product or service.

 

 

 

There are clear advantages to this:

~*~

You don't have to come up with a new idea

- someone else has had it and tested it, too!

 

~*~

Larger,

 well-established franchise operations

 will often have national advertising campaigns

and a solid trading name.

 

~*~

 Good franchisors

will offer comprehensive training programmes

 in sales and indeed all business skills.

 

~*~

Good franchisors can also help

secure funding for your investment as well as e.g.

discounted bulk-buy supplies for outlets

 when you are in operation.

 

~*~

If aware that you are running a franchise,

 customers will also understand that you

will be offering the best possible value for

 money and service - although you run your 'own show',

you are part of a much larger organisation.

Who is in Control?
Each business outlet is owned

 and operated by the franchisee.

However,

the franchisor retains control over the way

 in which products and services are marketed and sold,

and controls the quality and standards of the business.

What are the Cost Implications?
The franchisor will receive an initial fee

from the franchisee, payable at the outset,

 together with on-going management service fees

- usually based on a percentage of annual turnover

or mark-ups on supplies.

 In return,

 the franchisor has an obligation to support

the franchise network,

 notably with training, product development,

 advertising, promotional activities

 and with a specialist range of management services.