| |
|
Resource Links for How To Franchise
What is Franchising?
Franchising is a type of business where you set up by paying someone
for his or her business strategy, marketing strategy, operations strategy,
and the use of his or her name. It is -- a way establishing a relationship
with a successful business so you can use its systems and capitalize on its
existing brand awareness in order to get a quicker return on your own
investment. You are using its proven system and name, and running it by its
rules.
How to Franchise?
There are two
groups involved in a franchise, the franchisor (the person or company
leasing the rights to the business name and system) and the franchisee
( the person who
purchases it).
The right to the franchise is sold by the franchisor to the franchisee
for an initial sum of money, often called the up-front entry fee, or
franchise fee.
This money will be paid once the contract has been signed.
The contract (franchise agreement) details the responsibilities of
both the franchisor and the franchisee, and is usually for a specific
length of time (typically several years). Once the contract expires, it must be
renewed. State laws often have an impact on the options for this renewal.
This initial franchise fee doesn't include anything except the rights to use
the name and system, and sometimes training, procedures, manuals, and other
assistance like site selection.
It doesn't include any of the necessary inventory, fixtures, furniture or
real estate.
In addition to the franchise fee, the franchisee must pay the franchisor
royalty fees, or other on-going payments.
These payments are usually taken as a percentage of sales, but can also be
set up as a fixed amount or on a sliding scale.
The terms of these fees will be spelled out in the franchise agreement.
These payments are for the on-going services and support that the franchisor
provides. Franchisors may also sell supplies directly to their franchisees.
Advertising funds are also paid periodically. These funds are usually put
into a general account and used for national and regional promotion for the
entire chain.
The biggest advantage of franchising appears to be the reduction of risk you
will be taking for your investment.
This is because franchises typically get up and running faster, and are
profitable more quickly.
This can be a result of better management as well as a well-known name.
According to the Small Business Administration (SBA), most small businesses
fail because of weak management. It is in this area that the franchising
option shines the most. When you lease a franchise, you are leasing that
managerial know-how.
You also usually get better deals on supplies because the franchise company
can purchase goods and supplies in bulk for the entire chain, and then pass
that savings on to you and the other franchise units.
The often-instant recognition from customers is also a big plus. Customers
are dealing with a "known" rather than an "unknown."
For the customer, the advantages of a franchise include the comfort of
knowing what you're getting.
The questions for you as a potential franchisee are: Are you looking for
something that is uniquely yours? Or do you simply want to run the show,
regardless if it's by someone else's rules?
You can find more on this topic - How To
Franchise
- in the above Resource Links.
Claim Your Free Bonus
|
|
|