Franchising has traditionally been a selling industry. Franchises are sold by franchisors and bought by interested franchisees. However, franchising has evolved when it was realized that a franchise would benefit more if changes are initiated that would focus on the quality of the franchisees selected rather than focusing solely on the franchisees’ bankroll.
A company is franchised by the franchisor so that he could expand quickly without the need for additional equity. Franchising also aids in branding efforts because the more branches there are, the more popular a company becomes. A franchisor also gains profits not only from direct clients who avail of the company’s products and services, but also from the royalties that come in from those who avail of the business concept and methods already in place.
To realize these benefits, it is important that the franchisee selected to carry the brand name be more than somebody who has enough money to invest. The franchisee must have business aptitude in order to effectively implement the business systems purchased. The franchisee must be motivated so that he can make a success out of his franchise venture.
Thus, not everybody who has the financial capacity to invest can be assured of a franchise. A franchise has become a privilege and it is awarded by the franchisor only to deserving franchise applicants. Most franchise operators have a selection committee especially tasked to screen franchise applicants so that only those with the right attitude can be awarded a franchise.
But the focus on awarding franchises has dimmed the concept of selling franchises. Some franchise operators have neglected to make any effort towards marketing their franchise opportunity and focused more on the selection process.
It should be noted that franchising is a selling business first and foremost. A company that wishes to expand and profit through the franchising route should not fail to expend some effort towards generating interest in the company. If proper marketing and advertising of the franchise opportunity is neglected, there will be no applicants to screen and no profits forthcoming.
A successful franchise operation combines both selling and awarding. First a franchisor must sell the concept to potential franchisees. Next a selection is made based on tried and proven criteria. Finally, an award of the franchise is made to deserving applicants. Only a franchisor who understands the need for both the selling and awarding concepts is assured of thriving.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
Acquiring a franchise is not a simple matter of having money to invest. It is of course a necessary requirement but it is not sufficient to get you approved for a franchise.
A franchisee is important to a franchisor. A franchisee gives a franchisor the means to expand the business and the brand without putting up any additional capital. Franchising increases a company’s buying power and helps the franchise company realize profits from other avenues.
But a franchisor cannot award a franchise to just anybody who is interested. A franchise company has toiled hard and long to establish its name and reputation. Choosing a franchisee unwisely will lead to adverse repercussions. For one, franchise companies are required by law to report in the Uniform Franchise Offering Circular whenever a franchise fails. The more the failed franchises, the less attractive the franchise company becomes to potential franchisees. A franchise failing thus reflects badly on the franchisor.
It is thus understandable if franchisors have a rigorous evaluation procedure to screen franchise applicants. It is not done to discriminate against anyone. What it does is ensure that the franchise would go only to people who will conform to the business’ winning strategies and those who will protect and enhance the brand.
If you are one of the countless franchisees interested in acquiring a franchise, then you’d better demonstrate your willingness to learn, follow and conform. Franchisors do not require blind obedience but they do expect franchisees to work within their set guidelines which have already been proven to be effective. Your success is the franchisor’s success so the franchisor wants to make sure that you will not willfully disregard established practices.
You need to have a general grasp of business concepts if you want your franchise application approved. Experience is not necessary but understanding definitely is. A franchisor will not award you a franchise if he cannot be assured that you understand enough to be able to learn what you need to know.
You will become a more desirable franchisee if you have demonstrable leadership skills. You must convince the franchisor that you know how to manage people and you know how to deal with your employees, the franchise management team and your other co-franchisees. To get approved for a franchise, you have to convince the franchisor that you are perfect for the opportunity. Only then can you be assured of a slot.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
Ever wondered why franchising draws a lot of women? Records show that many women have turned to franchising. The number of female business owners in the country today is at a record high. More and more women are abandoning their careers or their housewife roles to become their own boss.
Franchising is actually a very good way to start your own business. When you take out a franchise of an established company, you are buying the brand, concept, training, and business systems of the mother company. Franchising also ensures that you have a support system in place to get you through the rough patches and steer you away from the pitfalls.
When you purchase a franchise, you will be guided by experts on deciding where to put up your branch. You will get a consultant who will be in charge of decorating your branch to conform to the company’s standard look and feel. Your initial inventory is more than likely included in your franchise agreement, and stipulations for future procurement would also be provided.
A franchise gives start-up owners the use of a business name that already has a following. And the franchisor usually has a marketing and advertising infrastructure in place for the whole chain from which you can benefit greatly.
Moreover, when you take out a franchise, you get the right to use the applications especially designed for the business. The business systems that have proven to be effective for the company become yours to use and implement. And of course, the franchisor provides you all the required trainings so that you can take advantage of the tools that the franchisor makes available to you.
Franchising endows a lot of benefits to the franchisee. Franchising has a powerful draw not only on women but on anybody who has the right means and attitude to attempt it. But the fact remains that women are especially attracted to franchising.
The main allure that franchising has for women must come from the fact that even if the workplace is more receptive to women nowadays, it is a sad fact that some women still do not get compensation commensurate to their skills because of their gender. Owning a business can be the only way a woman can rightfully earn what she’s worth. And since franchising is the easiest way of starting up a business, more and more women are drawn to franchising.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
A franchise agreement is just like any contract that you have ever entered into. It defines the rights and obligations of the parties involved. Franchise agreements in particular define the relationship between the franchisor (the one awarding the franchise) and the franchisee (the one buying the franchise).
There are legal, practical and operational issues that need to be negotiated in a franchise deal. The franchise agreements sum up the terms of the negotiations between the franchisor and the franchisee. The signatures at the bottom of the agreement signify that the agreement has been accepted and understood by all involved parties.
Most established companies who are open for franchise have standard franchise agreements that leaves little room for negotiation and special terms. This is actually good for a franchisee. This ensures fairness because negotiation skills do not have much impact on the final contract. Thus, if you buy a franchise of an established business, you are sure that you are getting exactly what the other franchisees like you got in their own franchise agreements.
A franchise agreement is very important. Herein is stated in black and white what your monetary obligations to the franchisor are and what you can expect from the franchisor in return. It should state in no uncertain terms the scope of territory to which your franchise gives you exclusive rights to.
Franchise agreements enumerate all the business operating practices that are allowed, encouraged and absolutely prohibited. The franchise agreement makes sure that you conform to the methods that were already proven to be effective so that you can be assured of your own success.
A franchise agreement protects your interests. If your franchise agreement says that inventory can be purchased through the franchisor at a 20% discount, then you can be sure that you will get this discount. If the franchise agreement prohibits franchisees to purchase ingredients from any other source except the franchisor, then you can be sure that the quality of your products will be at par with what the customers of the company expect from that particular company.
The franchise agreement is not there to confuse you but to guarantee that you will be getting your money’s worth. Treat it with respect by reading it thoroughly and asking questions if necessary. Only after you are satisfied with its stipulations should you sign it. And then, be sure to stick with it.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
The proper use of technology can revolutionize the way you do business. With the right mix of technological tools and systems, your franchise can rise to the top of your business field and keep you there. This move will also save you a lot of time and increase your efficiency as well as profits. After all, opportunity cost is incurred when you spend more time than you have to at doing tedious and routine administrative duties. By using the available technology in your franchise business, you can save a lot of time which can then be used for more productive endeavors.
In the franchising industry particularly, the right use of technology can drastically improve the support systems in place. This would get rid of repetitive and redundant tasks that the franchisees have had to put up with. With an impregnable and highly efficient support system in place, a franchise could quickly get ahead of the pack.
So, how do you go about implementing technology inspired changes in your own franchise business? First of all, research available technology that you may find useful in your franchise business. You do not have to buy a fax just because everyone has it. Use email instead. Better yet, make use of the revolutionary voip tools already in the market today. You have to remain informed on the better and newer ways of keeping the communication lines between you and your franchisees open.
One other very important change that you can implement in your business is introducing software that automates and integrates all tasks that could directly be accomplished by computers. It would be better if your franchise incorporates the use of software that integrates accounting functions with inventory and sales tracking. It would be even better if your business software also assimilate payroll and personnel tracking applications. And to make everything automated, make sure that your system does not require tedious and manual updating. To illustrate, the cash registers can automatically update your database, thereby getting rid of the need to manually transfer information from paper to computers. Reducing the number of people in your information chain has the added benefit of reducing human error.
Finally, include continuous technology training in your franchise packages. Your technological improvements will be in vain if your franchisees do not know how to properly use them. Impress on your franchisees the importance of technology in a successful franchise.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
It is preferable to franchise an established and reputable company. The company that you should consider to franchise must also have an evidently successful system in place and an effective framework for transferring expertise to the franchisees. Unfortunately, these established companies can be quite unbending when it comes to franchise agreements. After all, they have the upper hand.
But even if the franchise companies leave you less room for negotiations than you might want, it doesn’t mean that you cannot get the best deal out of a franchise venture. You just have to know what to do and how to utilize what little bargaining power you may have at your disposal.
The first room for negotiations is the franchise agreement. Even if it is written in bold black letters that the terms are nonnegotiable, you still have to try and see what you can do to negotiate more favorable terms. Consult a franchise lawyer and see what changes can be instituted that will minimize unfavorable stipulations. At the very least, the franchise lawyer can help you understand the franchise agreement better and help clear up any misconceptions that you may have about it.
Whenever you meet with the franchise company’s representative, be sure to take notes. Everything said and done by the franchisor should be noted. Take special care to record informal promises by the franchisor. When the franchise agreement does not mention these promises, be sure to negotiate for their inclusion.
As for the stipulations that cannot be changed to your advantage, you have to make sure that you prepare for any eventuality that may arise because of them. Know your rights under the law and work with other franchisees that belong to your franchise company. Join franchise associations that could be valuable sources of aid and information.
As the franchise relationship progresses and you feel that you cannot meet the franchise criteria that the contract says you have to attain, do not meekly wait for the franchise termination letter. Franchisors do not like failure more than you do for it does not do much good for the franchise company’s image and reputation. Try to renegotiate your terms and your performance benchmarks.
Finally, the best way of getting the most out of a franchise is making sure that you do everything in your power to make your franchise succeed and meet the performance criteria that you have been set.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
As the franchisor or franchise operator, you probably know what you need to stress when you’re making a pitch to a potential franchisee. You have to expound on the prominence of your brand as well as the exceptional systems that you have in place. But you may be forgetting to include something that would cinch the deal.
A franchise business derives its allure for potential investors from the independence it gives the business owner. In a franchise, the franchisee can make an investment in the franchise, build his equity and then get out. He is not personally responsible for the brand or the business, unlike an enterprise that’s been built from scratch. Turnover of management is expected to be less hassling in a franchise than in any other type of business.
Thus, when you entice a potential franchisee to come aboard your franchise operations, you need to present the venture in such a way as to make both entrance and exit clear to your prospects. This is fair to the franchisee for he will know exactly what to expect if and when he wants to let the franchise go. Would he be selling at a profit or loss? How easy can he sell his franchise out? These are questions that a clear exit strategy answers for the franchisee. On your part, a clear exit strategy makes your franchise offer more attractive for potential franchisees and so you get to expand your business and build your brand quicker. With more franchisees joining you, you increase your buying power and you increase revenues without any additional capital investment.
For a clear exit strategy, you must be able to document all the support that your franchisee can get in the business. You will have to create an easy to read and comprehensive manual detailing the full business operations from purchasing, to preparations and deliveries. There should be sections on personnel management and management practices. The technologies and business systems that would be useful in your particular franchise should also be included in the franchise package as well as enough training to make this technology significant.
By documenting every step of the franchise operations, from the most significant to the least important, you are creating a clear concept that could easily be turned over to another owner, whether he is your potential franchisee or the one whom your franchisee is thinking of selling to.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
An exceptional business concept and a unique support and operating system turned The Little Gym into one of the franchising industry leaders. The Little Gym was founded by musician, gymnast and kinesiologist Robert Wes in 1976. The Little Gym’s main aim is to create an environment for children aged 0-12 years where they can develop their motor skills while having fun with other children in a noncompetitive manner. This environment is brought about by a strictly engineered and systematic curriculum that integrates positive experiences for kids.
At the heart of the concept is the vision that The Little Gym’s fun and positive learning environment would lead to the children’s intellectual, emotional and physical development and make for the perfect formula for eventual success in adulthood.
But the validity of the concept is not the only thing that The Little Gym franchise has going for it. In 1994, Bingham became the CEO and President of the franchise and he revolutionized The Little Gym franchise.
What Bingham did was initiate changes that accelerated The Little Gym’s franchising success. One of these changes was setting in place a system to facilitate smooth transfer and replication of effective business strategies. He did this by using the bottom-up then top-down approach instead of relying on the traditional top-down approach.
Usually, a franchise has a management team composed of experts from various fields. These people then train the franchisees on how to operate their franchise. But Bingham realized that the people who can better train the new franchisees on how to make their own franchise successful are the franchisees who have proven themselves competent in just such an endeavor. Thus in The Little Gym, the experienced franchisees were incorporated into the management team. Their job is to replicate effective processes and strategies in the new franchises, not merely give the new franchisees a general lecture.
This strategy cinched The Little Gym’s success. The credibility of the franchisees-turned-consultants proved invaluable in motivating the new franchisees. Hands on, practical and relevant experience was transferred to the new partners.
The Little Gym has also made it a point to be very selective in choosing the people they would entrust a franchise to. Of the countless applications, only those who are in full concurrence with the business concept and those who have a proven liking for kids and the requisite business skills are given the opportunity to be franchise partners.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
At first glance, it would seem ideal if a franchise does not require a royalty fee. And in fact, there are various franchise opportunities being offered today that do not have royalty fees attached. These opportunities would boast that all you’ll need to pay for is a lump sum that pays for your franchise, the start-up inventory and the start-up training. After that, all revenues would be yours. They would say that this is as it should be, and you are most likely to agree.
But should it really be so? A franchise royalty fee is actually the Franchisor’s (the owner of the whole franchise) share of your revenues. It is usually around 2% to 10% of your profits. And it is usually part of a franchise package that offers full-time and continual support to the Franchisee.
In a nutshell, the royalty fee pays for the value that a Franchisor gives the Franchisee when a franchise contract is engaged in by both parties. First of all, when a Franchisee buys a right to a franchise, he is buying a right to operate using a previously established, and thus known, business. The Franchisee no longer has to start from an unknown entity and build a brand. The brand is all a part of the whole package.
More important than brand, however, a franchise gives a Franchisee access to the operating system of the company. This operating system is composed of all aspects of business operations that have been tried and proven to be effective by the Franchisor. When you take up a franchise, you automatically gain experience that is very relevant to your own business operations through proper and continuous training.
The franchise royalty fee also covers the support that the Franchisor continually gives to the Franchisee. Support refers to immediate and constant access to consultants who can help troubleshoot problems for the Franchisee. This also refers to the advertising and marketing that the Franchisor does for the whole chain. The support system that your royalty pays for makes sure that you’re not left floundering.
In a franchise opportunity that has no royalty fee, you cannot expect to get all these benefits even if they were promised. The brand is the least that you could expect. But without the operating system and the support system that the royalty fee ensures you have, this wouldn’t count for much in the long run.
Tristan Andrews writes useful articles about franchises. Discover and explore the world of Franchising. Find out how owning a franchise can expand your financial horizons at http://www.franchise-guide.org/
While there are some who have succeeded in reaping positive results from their franchise business venture, there are others who have become failures at it. Basically, the dissatisfaction comes from the fact that they have failed to anticipate and understand the dynamics of franchising. Many people get into this without carefully preparing the steps and moves to take and so eventually, the risk becomes a big loss.
For starters, some people have failed at identifying and evaluating if the business is indeed ideal for them. Some people have failed to acknowledge that the concept may not be one that is comfortable to their preference. Yet many still proceed to buying the franchise because others have been successful at it, and not because they know it’s what they can work with best.
In line with this, failure to be comfortable with the franchise has also a lot to do with how much communication exists between the franchisee and the franchisor. Talking to the owners may give you ideas on how to go about the business and provide you tips that could be the key to your success. Also, if you really want to know more about the business you are investing on, who else should be your source but the owners? Some people fail because of lack of knowledge about the product. Every franchisee has to do their homework diligently and carefully learn about what they are selling or offering. Why so? Because knowing about the product indicates you are comfortable selling them. When you are comfortable selling them you can market this to your clients persuasively.
Failure also happens when there is no careful preparation and planning:
The Cost
As franchisee you need to be plan adequately - the budget, the expenses, the cost of operation - all these have to be considered at least three years down the line. If you have the figures laid out, then you will have an idea of how your business should move and where you should go.
The Market
Those who fail assume that by targeting certain groups of people in the market alone already translates to a successful business venture. Not necessarily so; the market changes and changes every so often. People’s preferences differ and competition could threaten your franchise. To be successful at your venture, you have to think of ways to stay competitive. You have to have strategies set for situations like this.
Business involves a lot of risk. And many remain stable because the give the same level of commitment as when they first started. It is easy to slack, especially when you know your franchise is part of a bigger company. But you have to remember that if you don’t work for it, you will definitely fail. Stay committed to your business venture and always be motivated. If you remain motivated, everything else follows.
Tristan Andrews writes useful articles about franchises. Discover the world of Franchising. Explore franchise opportunitiesthat can expand your financial horizons at http://www.franchise-guide.org/