What is a Franchise? In simple and accessible language, this is the acquisition of the right to use a well-known brand for profit. Some businessmen believe that buying a franchise and starting an entrepreneurial activity on a well-promoted brand is much more profitable than promoting their business from scratch. And they are partly right. Let's understand such a concept as a franchise, and also consider the procedure for its registration.
Features of the franchise agreement
The concept of "franchise" comes from the French word, which in translation into Russian sounds like "privilege". From an economic point of view, buying a franchise means entering into an agreement with a company with a well-known brand. For example, the Subway fast food restaurant chain has over 30 thousand points of sale. And all this thanks to the franchise.
A person who wishes to acquire the rights to use a trademark is called a franchisee. In addition to the promoted brand, he receives the necessary materials for work, training, advice and support. That is, an entrepreneur, drawing up a franchise agreement, draws up some kind of insurance against risks. In addition, he can contact the franchisor at any time for support and advice. All these conditions are spelled out in the contract.
Of course, starting your own business on a prepared ground is much easier, because people are already familiar with the brand (that is, you do not need to spend money on advertising). In addition, in the course of training, you will gain vast experience in running and organizing a business.
How do I get a franchise?
First of all, you must decide on the amount that you can invest in the franchise. This contribution is called a lump sum. For example, to enter into an agreement with the founders of Subway, you will need to deposit an amount equal to $ 12,000 (excluding VAT). In addition, in the course of work on the basis of the contract, you will pay 8% of the turnover, this contribution is called royalties.
For the most profitable purchase of a franchise, contact the lawyers involved in this area. It is the specialists who will be able to select a list of companies for you, provide the most complete information about their field of activity. If you want to save money, you can choose a company yourself. To do this, be sure to conduct a detailed analysis of all available offers (you can find them on the Internet).
Conduct marketing research. The area of activity that you want to do may not be in demand in your area. For example, in an area with a predominantly elderly population, it is not advisable to open a fast food chain.
Be sure to check with the franchise owner for the estimated cost of launching a new point of sale. For example, if we consider the Subway trademark, here the costs of opening a restaurant will be about 100-200 thousand dollars (it all depends on the area of the outlet). A very important indicator is the payback period of the project. Your partners may also provide this information. When concluding a contract, be sure to specify what is included in the franchise price. It is better to analyze all the points of the legal document with a lawyer, so you will avoid many problems.
Pros and cons of the franchise
Of course, like any destination, a franchise has advantages and disadvantages. The advantages include getting a well-promoted brand, high speed of business development, detailed instructions on how to run your business, and advertising support. In addition, the franchise owners give a guarantee of the exclusivity of the business in your region. Let's say you decide to enter into an agreement with the Subway fast food chain. The founders give you the guarantee that you will be working under this brand in your region alone.
A significant disadvantage is the high cost of this direction. In addition, brand owners have very strict requirements that you cannot neglect. For example, the contract may contain a condition on the presence of your own retail space, that is, you do not have the right to rent it. You also have no right to come up with something new and launch your own, even if clients ask you to do it (organize holidays, etc.).
Conclusion
A few years ago, the concept of "franchise" was known only to advanced entrepreneurs. Nowadays, almost every person who decides to start his own business asks the question: what is a franchise and how to get it. As you can see, it is quite easy to arrange it, but funds are needed, and rather big ones. Therefore, if you are financially constrained, try to create your own brand. Perhaps in the future you will also be the owner of a franchise, and it will be you who will be paid money to use your trademark.
