It is common for every businessman to think about whether to start a business and how to act in order to quickly achieve maximum benefits. Franchising provides an opportunity not only to start a business, but also to work with a brand that has already made a name for itself. However, it is still worth considering the proposal, and not giving your consent immediately.
A franchise is a set of services and goods transferred by the seller for money, that is, the right to open a business according to a ready-made recipe, but under a foreign brand.
Contract case
Franchising is a ready-made business, a fully developed and proven economic component and reputation. The entrepreneur is provided with both a break-even analysis and options for the best way to open an enterprise.
Among the main advantages is the cost schedule. All possible expenses are listed in it. This item is especially suitable for those who are starting their own business for the first time.
The company already exists on the market, and it has confirmed its success. This means that exactly the same business plan of the new organization is guaranteed to receive the attention of the consumer.
pros
The franchisor assists in the selection and training of employees. Usually the internship is carried out on the territory of already functioning enterprises. For a shop that is just opening up with a large staff of employees, this is especially important, because both the managerial staff and the owner with co-founders will be trained.
The last argument will delight businessmen with no experience. Micro-business options with a maximum of 5 people are also offered. Then the training will take place in a much shorter time.
There is no need for impressive spending on advertising. This task is undertaken by the franchisor. And visitor traffic will be provided by the well-known brand under which it operates.
Upon opening, the beginner receives comprehensive instructions on what to do and how to do it. For restaurants and cafes, the exact recipe is provided, for shops - detailed instructions on the display of products.
You don't have to think about suppliers either. The franchisee purchases from the sellers already approved by the franchisor.
The appearance of the employees and the style of their communication with customers are thought out to the smallest detail. The company operating under a well-known brand inspires confidence among visitors, because they are confident in the quality of products and services.
The salary level is determined by the owner himself. Nobody limits him in this matter, since the proposed scheme is only recommended.
Minuses
But even such a winning project has its "buts". And these include ad fees, royalties, and lump-sum fees. A lump sum is a lump sum paid to a franchisor for the right to use his brand.
Royalty is a monthly payment. The “lease” of a brand can be fixed or equal to a percentage of revenue. Sometimes the "landlord" also requires quite high deductions for advertising.
The possibility of other deductions depends on the popularity of the company and the number of franchised establishments. And the higher the income, the more contributions will have to be paid.
Products may only be purchased from agreed suppliers at a specified cost. Other sellers have no chance of purchasing goods at better prices. And the price of products is pre-approved throughout the network, so it will not be possible to reduce costs and increase profitability.
All franchisees have different criteria, but the work is carried out only according to the standards of the company. Innovation is discouraged. Violation of any clause may result in termination of the franchise agreement. Sometimes you have to buy products for the amount stipulated by these canons, but the amount required to open a business.
This kind of business is most suitable for beginners. The pros and cons in a franchise case are common. In this case, it is necessary to take into account all the pros and cons of such an enterprise, because the same fact can be both a minus and a plus.
