With the concept of the franchise, many are familiar and are currently examples of such business. Business, and furthermore entails its own people and represents excellent prospect. but, not all turns out to be successful and achieve the desired interest. After all, to start a business from scratch is not so easy, this requires the development of a quality business plan, and most importantly come up with a unique idea. Indeed, in our time, it seems, already all areas of the occupied, find and occupy the niche is quite difficult. For such, who are limited imagination and not confident in their business plans for the franchise, It can be a good starting point for such people. Especially so many successful examples already working on the franchise. so, let's deal with this concept, the ins and outs of this type of business.
Franchise - the franchisor to provide well-known brand, trademark, technology, or other types of intangible benefits. Private person becomes already known company the right to work under its trademark.
Positive aspects of the franchise business
- popular brand, ready business reputation and the idea of the possibility of its realization
it, of course, the main advantage of franchise. You are provided with a ready to use the main "skate" business franchise is, that you get a ready-made solution, with the principles and nuances of its implementation. It all depends on the object acquired franchise. Popular brands, known everywhere, a large number of consumers do not require advertising campaigns. And so, initially we can expect a flow of buyers and customers.
2. rapid onset
From the above it should be, that time franchise buyers do not need to spend time and money on advertising and brand promotion. Business is beginning to bear fruit after the opening. This does not mean a complete absence of problems and difficulties, no effort to achieve the intended results, at all promising prospects, it'll be hard. Therefore it is necessary to adhere to the recommendations of the franchisor, which gave you a great start.
3. All kinds of support from the franchisor
The franchisor develops a training program, based on its invaluable work experience. He has to explain everything and tell, how to do and what is to be feared and avoided. therefore, As the wise saying. It is better to learn from the experience of others, than to make their own mistakes. So, in most franchise agreements advisory services are already included. And in case of an emergency or complications can safely ask for help from the franchisor.
4. Financial estimates and forecasts
Any new startups, It faces the challenge of creating a business plan. And of course, calculating financial indicators alone, you may encounter some problems. After all the information, required for settlement, basically it represents approximate and no valid data and forecasts. This is just personal speculation, and it is necessary to face actually, It shows only the future. choosing a franchise, You are relying on existing indicators and data. By volume, the available analytical and statistical data already acquired the franchise. Do not forget about the marketing research of the market segment. Of course, with high precision not get to settle, because there is always a lot of factors affecting these tsyfry, and in this situation, the business plan will correspond to a maximum of reality. And you can more confidently expect to certain events.
5. More likely to get bank support
If you find yourself in a situation, when you need the amount of money to open and come in a credit institution. The bank is more likely to extend credit in the case of, when you want to buy a franchise, than to open your own business from scratch. Third-party support, a weighty argument in favor of the bank makes a positive decision, and the chances of approval increase manifold. Do not forget about, many banks have special loan conditions, more loyal conditions, when buying a franchise.
Cons business franchise
With a large number of positive aspects in the conduct of the franchise business, in this activity has its negative sides, that everyone should keep in mind.
1. mandatory payments
All that provides for its part franchisor, he does it for a certain amount of money. More often, option is used, in which the first paid lump-sum payment, and then paid royalties.
Lump-sum payment - a one-time payment, it is paid at the beginning and is the franchise fee, or rather for the received material and immaterial rights. This payout is dependent on the brand, which you are going to cooperate, his fame and popularity. If you purchased a fairly recognizable brand, the amount may be sufficient weight.
Royalty - periodically make payments to the franchisor, and the duration of the franchise agreement. these payments, pre-defined and established in the contract, and has, fixed character. payments, also tied to certain parameters for the database in the process of calculation. This base can act: company profits, revenue, labor force, floor area, etc.. Royalties are not necessarily monthly payment, franchisor in its sole discretion determine the frequency of payments. It may be an annual payment, monthly or quarterly.
worth considering, that these payments increased start-up costs, and reduce the amount of profits in the future.
2. Lack of autonomy
By purchasing a franchise, you become dependent on the franchisor. Above all, such a relationship can be seen in the trading franchise, when the franchisor is acting as a supplier, wherein single. Also, dependence is in command and follow the instructions of the franchisor. If this is a serious global brand, this dependence will be traced around the, even in little things, without the right of decision-making and improvisation.
3. Limiting development.
When it comes to your own business, businessman strive to expand the market and moving to other areas, this is called development. In the case of franchising, much more complicated. Open a new point has not washed, and indeed can be so, that another new territory already occupied and owned by another franchisee.
4. Limiting the term of the contract and blurred future prospects.
Usually the contract is for a fixed term and the right to use the franchise opportunity during this time period. Most often, these terms are not prolonged, usually for a period of one to five years. Of course, you can extend the contract, but it depends on whether the franchisor will continue its activities. If he closes, then you will be forced to suspend operations.
After considering all the pros and cons of franchise, I understand all the nuances of this activity, should study the market franchises. After all, the field of business can be profitable and attractive. Decision-making, is yours. Choose the most suitable profile for your activities and achieve results. The franchise is attractive, that even in the absence of business experience, thanks to assistance from the franchisor., you can achieve a lot of success.