January is always a difficult month for obvious reasons, but then we must also admit that times are still hard. Companies are closing left, right and centre due to the hard economic times. In times like this Franchising could be the ideal way to expand or save a business.
January is always a difficult month for obvious reasons, but then we must also admit that times are still hard. Companies are closing left, right and centre due to the hard economic times. In times like this Franchising could be the ideal way to expand or save a business.
What exactly is a franchise? According to sources on the net; a franchise is a business arrangement where the developer/owner (the franchiser) of a business concept grants others (the franchisees) the licensed right to own and operate a business based on the franchiser’s business concept, using its trademark
The franchiser helps the franchisee start his or her business, providing training, assistance with site selection, site development and ordering inventory, advertising and marketing support. For this, the franchisee pays an initial franchise fee, ongoing royalty fees, advertising fees and other fees to the franchiser. And the franchisee needs to raise the money to start the franchise and must manage its ongoing operation
Even though franchising is almost a good deal in helping a company do business, it’s not something to embark on lightly. Developing a successful franchise needs careful planning, continuous monitoring and advice and support from professionals such as an independent franchise consultant, accountant and specialist franchise lawyer and the support of your bank, because buying a franchise does not come cheap.
As much as buying franchise is expensive the advantages of dealing with a franchise outweighs that of opening an entirely new business.
Rapid business growth – franchising can make the company buying the franchise grow very fast, with a number of outlets countrywide or even in different parts of the world; because when you buy a franchise you also buy the name of the company, making it easier for one to go into business than opening business in a new name. Big business that is known to make it big in franchising is the famous McDonalds.
Small central organisation – a company that will sell its franchise will only need a small central organisation with a few highly skilled staff to conduct the business.
Franchisees invest their own money- the better of part of selling a franchise is that the company selling a franchise gains without spending any monies, but just the name of the company.
Networking – when a company decides to sell its franchise, then it means that they are expanding the company networks. Developing a franchise network can also be expensive, in terms of management time and capital outlay, but the effort is worth the while.
Earning from the franchisees- when you appoint franchisees, your company will receive fees and the mother company will have a regular income from them. This also translates that if the mother company is not making any profits, these regular incomes can take care of it.
Whether you are selling the franchise or buying it, it is all a win-win situation because at the end of the day both parties will be in business.