Franchising is an ideal form of working for people wishing to start a business, reducing the initial investment and risks.
The affiliation, as the choice of working in a particular sector through a specific brand, raises the individual from many traditional activities (eg, assessment of market prospects, the choice of providers, policy-promotional) allowing, therefore, to become more specialized in certain areas of management.
Your decision to enter in Franchising activity obviously has consequences and affects your lives as aspiring affiliate for years, both financially and by involving both on the personal.
Your decision to enter the business world through the door of the franchise must therefore be preceded by an analysis of your expectations, initial conditions, skills, experience and personal characteristics.
Evaluate yourself first to see if the franchise is suitable for your characteristics is crucial.
How Many Types of Franchising are there?
The franchise currently has under three different types:
– Franchise Distribution : assumes that the franchisor has developed and tested techniques and methods of forming the business know-how that will transfer to its affiliate. Despite the use of trademarks, services rendered and goods supplied asks the franchisor to the franchisee a fee in the form of right of entry to the rental payments.
– Franchising services : the franchisee does not sell any products, but offers the services invented, developed and tested by the franchisor. The field of activity of this system is very diverse, ranging from catering to tourism and leisure, the press and fast playback for beauty salons and hairdressers, professional consulting services to educational institutions and training, from real estate agents to car, etc..
Franchising is one of the main tools created to fight unemployment in depressed areas of countries.
Except in the US, and now in China (2007) where there are explicit Federal (and in the US, State) laws covering franchise, most of the world recognizes ‘franchise’ but rarely makes legal provisions for it.
Only Australia, France and Brazil have significant Disclosure laws but Brazil regulates franchises more closely.
Where there is no specific law, franchise is considered a distribution system, whose laws apply, with the trademark (of the franchise system) covered by specific covenants.
How to Choose Your Franchising
Before decide which Franchising choose, it is important to evaluate some aspects:
– ask the franchisor all prior information regarding the company and its executives franchisor, the franchisee network of pre-existing contract, the market, costs and results of standard management of the network ;
– meet with members of the chain to find out the opinions of those who already had the experience that you are considering. You should contact more than one, possibly commercial areas not too dissimilar from their own. You will collect opinions a little conflicting, but the opinions collected and evaluated together, will help you to formulate your own judgments ;
– analyze the contract for not taking risks, better bring the franchise agreement to consult a lawyer, of course, before you sign it ;
– develop a serious economic and financial account to be aware of the investment in money and labor that awaits you, but also the return which can be expected. In this case it is important to estimate the necessary financial resources to the company ;
– study the market to have the correct perception of the location and values of the market, in which you could live and maybe work for years ;
– rationality and realism are key words for assessing the risks of each activity. So learn, evaluate, compare, and then decide ;
– do not blindly trust the reputation of certain brands. The best-known and established brands may have difficulty adapting to changes and be close to the decline. Because even large and well-established chains, are not able to give absolute guarantees.
How Franchising Works
Under a franchise, the franchisor usually makes sure beforehand that the franchisee has the necessary preparation and help in acquiring it.
Many signs have also provided real training to prepare both the affiliates on the rules of the franchise agreement, and on managing a business, human resources used, the product or service to be offered to the customer.
There is the rare case in which the formation of the franchisee usually entails a pilot center in the preliminary stages or in a store.
The franchisor provides the franchisee during the entire term of the contract, all assistance and information necessary and useful.
The contract may be asked to franchisees and staff who take part in all activities of improvement of knowledge, proposed by the franchisor.
The franchisor must provide to the franchisee prior to entering into the contract, accurate and complete information on the current situation and future prospects of the business sector with reference to the group exercise is concerned.
Very important for the franchisee is to know the budget and financial management of new activities.
Before signing the contract, the franchisor provides the franchisee with detailed information on setting up of the store or over the year to the total amount of investment required for equipment, materials, initial stock.
The affiliate is part of a group of a homogeneous whole, a structure with its own rules, characteristics and corporate culture.
That the franchisee must be brought to the work group, a feature that will allow him to fulfill the contract, to adapt to constraints imposed not only against the franchisor, but also fellow members of the same network.
The goal must be the development of your company, “exploiting” the advice and assistance using the franchisor, and the reputation of the network.
Both as an independent contractor, but also part of a homogeneous whole, the affiliate must accept and appreciate assistance of the franchisor and franchisee information from colleagues, and in return the network to transmit thoughts, experiences and innovations he has experienced.
There are many ways to make money offline, one of the popular ones is surely Franchising.
One of the most common saying in franchising is:
“Franchising means working for yourself, but not by yourself.”
Good luck with your new business !