Franchise. How it works?

So, you want to buy a franchise or just want to have an idea about this concept. 

Franchise - is the transfer of the right to use the brand, that is, the name of the company. The buyer franchise is called the franchisee, and the seller the franchisor. 

When buying a franchise, the franchisee receives for use not only a well-known brand, but also long-term developments of its partner, including technologies, production principles, development of the marketing department, development plans, as well as supplier contacts. At the same time, the firm-seller does not stop caring about the promotion and advertising of the brand. 

Speaking in simple language, a well-known company provides an individual entrepreneur to work under her name, fully supports it, and the entrepreneur, in turn, first pays the initial fee, and then with a fixed frequency makes deductions in the form of a certain percentage of sales, shortly royalties. 

The statistics asserts that a business acquired through a franchise is a very reliable option for starting a business. Approximately eighty percent of companies acquired under the franchise successfully cross the threshold of five years and continue to operate successfully and develop. 

However, everything has its advantages and disadvantages. Let's look at what they are for entrepreneurs planning to work on a franchise. 

The indisputable advantage of this work scheme is that a start-up entrepreneur who has no business experience can get down to business, the franchisor has already worked a lot of schemes, leaving the most efficient ones to the business. Therefore, the franchisee only remains to apply the proven principles in action. 

In addition, considerable funds have already been invested in the development of the brand, and the entrepreneur will not have to spend years on promotion and recognition, and a well-known name will bring with it a certain stream of regular customers. The selling company will always provide the buyer of the franchise with assistance in doing business: whether it is service, promotion, sales, or the best supply chain, the entrepreneur purchasing the franchise will have no headaches. 

It is believed that a representative of a well-known brand can more easily get credit approval than an entrepreneur who started his business “yesterday”. In addition, the franchise owner can act as a guarantor in obtaining a loan. 

Do not bypass the side and cons. Of course, this is a certain dependence on the one who gave the businessman a franchise. Franchisee is subject to the development course set by the owner of the brand. 

On the other hand, he will never have to independently develop this course. But it should be noted that the failure in the affairs of the franchisor will affect all franchises sold to them. 

Nowhere not to escape from a number of obligations that the buyer has to the owner of the brand. Regular royalty payments and strict compliance with the conditions for granting a brand. It often happens that a franchise enterprise closes precisely because the franchisee was unable to provide the proper level of service. 

Getting started, you need to decide what exactly you want to do. What business attracts you? It is worth doing the work in which you understand and to which you have a high degree of interest. Especially seriously need to approach this issue if you are going to open your first business. 

Listen to yourself, what area of ​​life is your genuine interest? Perhaps these are cars and everything connected with them? Or maybe you follow the fashion events and have an idea about the latest trends and the most current trends of the current season? It is worth thinking about working with a famous brand of clothing. And maybe, in your city there is still no popular fast food and people drop their saliva, looking at television advertising and not having the opportunity to purchase a much-desired burger? 

An important moment when buying a franchise - the amount of investment that you are willing to spend. The most expensive cost is the franchise of a restaurant, hotel, hypermarket or fitness club. Retail stores are already far inferior in price to these giants. 

Business franchise can be purchased in different ways. Of course, this can be done at your own expense, but the amount required for the initial payment is not always available. Therefore, often entrepreneurs open a business using a bank loan. It may happen that the investor will be the company itself, which has sold the franchise, but, as a rule, this is done if the franchisee is an employee of the company. The company may appoint the distinguished employee director of the branch, and later he may become its owner. If this option does not suit you, you can think about finding a third-party investor. The fact that you are going to invest money in the franchise, already increases investor interest in you. It is considered more reliable to invest in well-known brands, rather than in enterprises, the success of which no one can guarantee. 

You'd be surprised, but there are franchise companies in the world! Although no one forbids contact directly to the company-seller. 

Landmarks on the choice of franchise, which will bring doh