Thursday, April 16, 2015

What are the in-depth Responsibilities of Franchise Ownership

In business, franchising is a strategy to get and keep more customers. It’s a system to create an image in the customer’s mind on how the product or service can be of help to them. It is more than a method of product or service distribution that will satisfy customer’s needs. Through franchising, it allows the brand to be easily identified, allows franchisees to be successful in doing the same method of business, and hence it keeps and gets more customers as the marketing system is proven to dominate the market.

The success of franchising lies in understanding the business, its whole system, and the legal consequences of the franchiser-franchisee relationship. You as a franchisee will focus on working with the company managers and other franchisees to leverage the brand. Which means the entire focus is to attract more customers and keep the existing one.

Investing into franchise can be a reducing investment risk. However, aside from the fact that is more costly, you may be required to surrender the entire control of the business while taking care of your contractual obligations in franchise ownership. All throughout this article explains your responsibility of franchise ownership and what to expect in franchising.

Franchisee fee and other operating expenses 

You’ll pay the initial franchise in exchange for procuring the right to use the brand name and operational assistance. The initial fee is non-refundable. Other fees are rent, building an outlet, initial inventory, operating licenses, insurance, and grand opening fee for promoting the new outlet. Aside from that, there is monthly royalties that you have to pay the franchiser a percentage (30% - 40%) of your monthly gross income. It is a payment for the right in using the franchiser’s name, and you have to pay all throughout the duration of the franchise agreement. Whether or not you receive the operational support, you still have to pay the royalties. At times, you’ll pay an advertising fee not for your own outlet. Whether advertising for a new product or national advertising to attract new franchisees, you still have portions to pay the advertising for the brand.

Overall controls 

Franchisers normally control franchisees on how businesses will be conducted. This is to ensure uniformity of the system. You as a franchisee cannot exercise your ability in business judgment right away. You have to let the corporate know of your plans especially in management. You can’t just decide for your own outlet as all decision making will be done by the franchiser. Even the site and the building for your own outlet, the franchiser may not approve the site and other things you want.  In addition, there is a specific territorial that limits you to open other outlets. That even you want to move to a different location that is more profitable, you can’t just simply shut the current operation off and open another outlet.

Franchisers may enforce the design or appearance of the goods to standardize, so that the customer receives the same quality service, the same goods in every outlet. Some requirements are design changes or periodic renovations that you have to comply with those standards and you know that operational cost will increase. 

There are more restrictions than you imagine: method of operations, services or those goods offered for sale, sales area. A good example for this is franchising a restaurant. You can’t just simply add your own menu and omit the unpopular. Franchisers will never allow you to do this since you are using their name. One mistake that affects customer from one outlet will shake the entire brand. Of course, franchisers will take all the necessary actions to protect the brand. Moreover, hours of operation will be decided by the franchiser, not you. Often you have to agree the pre-approve plans, advertisements, employee uniform, and accounting procedures. Even purchasing supplies, you are required to purchase from the approved suppliers. You can’t just buy elsewhere even you can get it at lower costs.

Contract termination/ renewal 

The franchiser will have the right to terminate the contract should you breach any obligations. In fact, the contract in franchising is limited, and no guarantee for renewal. Failure to pay royalties, or failure to abide standard performance or sales restrictions often will cause the termination of contract, and it’s a pain to lose the investment. The franchiser may raise royalty payments and you can’t just bargain to lower the price. Whether you like it or not, you have to agree the number of years that your outlet will have to run. If they will say the contract will end 5 years but then you want to renew it for another 5 years just to make up the total investment, you still need to end it in 5 years. If they will say renewal is not allowed, there’s nothing you can do but kill them (just kidding).

Now you know that the risky part is when you couldn’t get the total investment. Here’s the secret. Franchising is a marketing strategy to gain more customers upon expanding outlets in different locations. The franchiser is the owner, and you as franchisee is only the investor. Don’t be stupid enough to think that the gross income of your outlet will be entirely yours. Even if you have million dollars of gross income a month, 40% of that (depends on the royalty fee stipulated in the contract) will go directly to the franchiser. The remaining 60% will still not be yours. You will have to pay your liabilities: employees, purchaser (where you owed your materials), and other operational expenses. You will realize in the end that only 0.50% is left for you. Sounds bad? Yes, that will happen if you jumped directly into franchising without reviewing the possibilities.

In order to avoid failures in investing franchise, following are the checklists which will help you decide:

  1. Are you ready to lose as much as you have invested? If you aren’t a risk-taker, it doesn’t lead you anywhere.
  2. Do you have enough financial capacity to finance the future costs in franchising?
  3. Do you have additional savings to live on while opening a franchise?
  4. Do you have knowledge, relevant education or experience in the business?
  5. Are you a type of going along with the flow (whatever your franchiser wants, you’ll provide?)
  6. Are you ready the consequences of the obligation you have signed up?
  7. Do you think you can survive with the type of business (franchising)?
  8. Do you think you can stay long with your franchiser?
  9. Are you ready to work with your franchiser?
  10. Do you understand all your obligations in the contract including the termination of the contract anytime?

If your answers to all of those questions are positive then you’re good to go. You just need to shop a franchise that will suit to your interest and public demand. You may attend a franchise exposition that will allow you to compare and view a variety of possibilities in franchising. It would be better to choose a franchise that suits your experience, goals, and investment limitations. Always take time to study on what the franchiser is offering to you. Make sure all your doubts and questions are cleared before investing a franchise. 

Wednesday, April 15, 2015

What is Credit Collection and Control

When banks, other financial sources, and other businesses deal out money and when they couldn’t make time to collect as they’re always busy, the credit collection and control takes in charge for this. The job is normally engaged in collection and control of debts. It is not actually a heart-less job that’s all about money. It is basically helping people to get out of debt and control their debts for them. Through offering payment plans that will fit for their situations, you actually help them. You will be working with individuals, businesses or even third party collection agents. You have to make sure that payments are made and ensure that overdue debts will be paid. Responsibilities for this job include organizing customer files (paperwork and admin), recording payments made, straightening out payment plans, chasing debtors when late payments, or even tracing debtors who moved out without letting the company know their new location or address. If the latter arise, this is the time you ask a help from telephone providers, perhaps post office to locate new address, and credit bureaus.
Is this job perfect for you?

There are companies who offer for this position in a freelance basis. So, if you are looking for a part-time, full time or could be flexible working shift, they’re all available. To work in a shift schedule, expect to work during evening and weekend. These hours are normally used to contact debtors who are unavailable during the day due to their work commitments or appointments and other personal reasons.

Your duties are usually done over the phone. If you have local clients, you’ll occasionally leave the office and visit them. Now, talking about the job if this will fit for you or not. If you have a temper like hulk with zero patience, I couldn’t say this is for you. As you normally engage people who can’t pay debts, you’ll go after them and you need to talk to them in a tactful and calm manner. I wonder if you can get money any sooner after hollering at them, what do you think? Though being positive and calm is a required personality for this job, you can’t be spineless either. You know there are people who can come up with different excuses as to why they can’t pay (my rabbit ate the notice you sent). You have to be assertive to ensure they will make payments.

Overall, this job needs a person who deals with people either frontal or over the phone. An exceptional communication skill is necessary. This is not only explaining how much the debtors owe, you have to give them options if they can’t pay on time. An experience in customer service will help you with this job in dealing with people.

Skills you need to master are: admin skills, communication, customer service, negotiation, organized, can work with deadlines, and computer skills.

With all those skills you’ve mastered, there’s one thing you must master…the kind of stress it will give to you. When people can’t pay, of course, it’s your job to follow the procedures to get the money back. These involve hard method by working with bailiffs, solicitors, and go with the court procedure. So, expect tantrums, more tears, and a lot of curse words. Now, if you’re somewhat sensitive and you hate confrontations, this is NOT for you.

What are the qualifications?

Financial experience such as bookkeeping or accounting may help you land on this job. Some companies require formal education such as accounting graduate or CPA. But in international countries, going to universities is not necessary. An associate course in credit law, insolvency, litigation, customer service and telephone techniques are required for the job. You might acquire skills from the CSA or Credit Services Association and ICM or Institute of Credit Management. In addition, your qualifications from them may help you advance your career into senior positions in the future. Qualifications include Diploma in Debt Collection, Introductory course in Credit Management; advanced courses include legal proceedings in Diploma in Credit Management, and a Degree in Credit Management. 

Wednesday, April 8, 2015

Excellent Tips Before you Engage into Franchising

Franchising grows exponentially every year. This is maybe the reason people are getting more interested to invest in franchise instead of setting up a new business. There could be a lot of advantages that people would be more willing to take risks in franchising; but what others do not know about is that, misconceptions may trap them that could ruin their entrepreneurial undertakings. Therefore, it’s important to arm entrepreneurs with the knowledge will lead to the point where one can decide to franchise or not. This article will help you pinpoint some obstacles in franchising and how you can handle them. Hopefully, you’ll be wiser before you engage into franchising.

  • Franchising is easy as 123. People would think about franchising easy, because after paying the fees they’ll go to training and seminar then viola! An instant business! Yes, it’s true that you’ll get a crown to start because you got into franchiser’s systems, but this doesn’t mean you’re walking in the park. Franchising needs commitment and so as the brand. It means you have to work hard on it. Your business will be now your concern 24/7. You’re going to put longer hours in it. You can’t just open the business, sit, then shut down anytime and come back on the next day. You’ll give your business its paid attention. It’s not like a normal employee would go to work Monday-Friday, 9 till 5, keeping himself in weekends or taking absent when not in the mood. The good thing for an employee is that, he’s still getting a salary in pay day, guaranteed. But when you’re starting in franchise, you have to be pro-active and hands-on. You may not be sure if you’re getting anything when you’re just starting a franchise. There are more fees to take care: monthly bills, royalty fees, monthly advertising fees, and so on.

  • Franchising is an instant success. This will take you nothing from the truth. Just because you see a lot of outlets, it doesn’t mean when you operate you’ll get loads of money. You must be thinking that more branches mean huge sales and definitely, the business is doing well. Why not try to visit any outlets especially during peak hours? You might end up thinking how awful they were performing the whole day. In this way, you’ll go beyond initial impression.  If possible, have a business talk with the existing franchisees. That way, you’ll get a vibrant picture to see how well they sell. You might realize that peak hours don’t last in the day’s entire operation. It will be your advantage if you clear this misconception from the start. As explained above, franchising will take lots of work. So, it’s never be an instant success if it will take time for a concept to work. Be mindful of the entire operation, put more hours in it, be hands-on all the time, and know what works well and not. That’s guaranteed your success!

  • Franchising is easy to operate anywhere. We are seeing restaurants left and right in the entire city, we’ve seen the same in the provinces. So, you must be thinking that this concept will do the same to retail and service. But, you might change your mind if we’ll discuss an example. Ever heard of food and drinks in small carts or booths? It is the concept that you cannot open it everywhere.  For example, you’re interested in serving cold mixed drinks in a small cart or booth. You’ve found one franchise business that expands very fast because of its high demand, since it’s summer. So, you open a franchise ahead of your house. This will be easy for you as you have your family members will operate while on summer break; on top of that, you won’t be paying for rent. The problem is, you failed to do a feasibility study. Sure, you save more on operating expenses, but are there more people in the area who will be interested to buy your product? Is your location a densely populated area? Therefore, you have to check the demographics: check the number of people, the busiest times, and verify if there are more people who can afford the products. Make sure you do those first before opening a brand.    

  • There’s a good deal, so sign up right away. Franchiser has creative ideas for franchise sales. Of course, they’ll offer you enormous discounts especially on franchise fee when you sign up the deal right away. You must be thinking now to start the business after getting a good amount in savings. You might have overlooked that you are in the end of the twig. Why? Because, you lost the opportunity to review the business carefully. You might have signed an agreement without checking all of the provisions. For starters, this could be a bad investment. An upfront discount doesn’t mean of a good deal. You might have failed to observe that the products have little expiry periods, or could be the rental fee is unreasonable. The result would be? Owning a business that has high costs with lean margins. Moreover, signing right away may get you unconsciously agreed to the provisions that you are completely opposed to. And this may result future conflicts. It is therefore concluded that rushing a franchise is never be a good idea. Being cautious while in searching the best franchise is a good way to get your dream business. Consult a lawyer should there be a need to. You’ll end up happy and guarantee success knowing you made the right choice.

There are more to discuss about, but the points above are the mere reality which issues are relevant in franchise searching before anyone decides to do franchising. One should be encourage to shop around with what good franchise investments are. Always do the review, not just twice, especially in franchise agreements. Get consultants if possible. The saying goes “slowly but surely” is always reliable.   

Monday, April 6, 2015

10 Practical Truths about Franchising

1. Franchising has a high success rate compared to building a new one. Its idea has been proven and successfully implemented; thus, low risk compared to a new business that has to start from the scratch. For a wise franchisee, what he purchases from the franchiser is the years of expertise and its proven method of the system. The learning acquired from the franchiser maybe tenfold worthy than what has been paid off. Unlike in starting a new business that requires more time and money for trial and error, a worthy franchise eliminates start-up problems. On top of that, the franchise business is open to anyone who’s willing to invest with or without business experience.

2. Brand and trademark has been successfully recognized for many years. This include that products or services are recognized by many households thus guarantees success. In addition, the cooperation between businesses in franchising supports everyone in becoming successful. The idea is like the total of the entirety is greater than its separate parts. Those in franchising come to be a part of its family whose members are working together for the benefit of the whole. One idea from one franchisee will be shared to the corporate office together with other franchisees.

3. You’re not alone in managing the business. Franchiser ensures that the perfect operation and as well as management efficiency are passed on to the franchisee. There are further training and education system to make sure that the utmost service will be provided to the end user. The training is the preparation for the franchisee to face the challenges in the business. This kind of support will help the franchisee overcome the incapability of running a business or perhaps the business sense acquired could be polished. Any assistance in the future will be taken care of by the franchiser all throughout the business term. Aside from that, there’s no need for a franchisee to take further research and development since a franchiser will be in a position to provide such. The franchisee will be later informed of the new products or services.  

4. It is easy to finance with positive outcome in reselling the franchise. The financing institution normally helps businesses that have reputation established. Because of its high success rate, it comes easy to get loans from banks or any financial institutions. Thus, the asset in franchise appreciates and easy to resell any time.

5. You can expect huge profits. The management method is passed on to the franchisee thus the success rate is expected. Although this depends on the right marketing strategy, but the correct implementation of brand positioning with growing customer base can increase sales and profits.

6. It has easy and manageable advertising systems. The franchise system provides help and direction for advertising; unlike in a small business that mostly can’t afford bulk for inventory products or extensive advertising. The brand exists for long years and this can be very easy for a franchisee to reduce in advertising cost hence the public has been aware.

7. The franchiser has full control in the management. Its system has been proven effective thus to be strictly followed: trademark, business expertise, knowledge and training. At times, the franchiser imposes a certain point of control that is difficult to follow resulting to conflict between the franchiser and franchisee. Furthermore, an individual who has difficulty following orders or commands or that the working system is displeasing may find franchising awfully frustrating. But, there might be other thing that a franchisee can be at times creative such as marketing.

8. There are on-going fees that need to be taken care of regularly: franchisee fee, royalty, additional fees such as services and advertising costs. Aside from this, there are expectations that a franchisee should need to get through with – expecting an instant success. Again, practical for success, it will not come without effort and hard work. Like other businesses, franchising requires initiative, tremendous time, and a solid industry.

9. There are failed expectations due to incompetence. The franchiser that fails to give enough support or squeezing the franchisee too aggressively for more profits can destroy the relationship between the franchiser and franchisee. On the other hand, a lax franchisee who’s failed to adhere to franchise agreements can later create damage to the business.

10. There are still risks to face in franchising, though lesser than an independent business. You have to think that you own the business, and to the great extent, you determine the attainment of your endeavor. Though the franchiser has a great program offered with a brand name, but in reality, much of the risks are yours. Moreover, you can’t get out right away after buying a franchise. This is much likely going into a marriage. The binding relationship between the franchisee and franchiser is legal that can possibly last for a long period. The utmost important is the relationship between the franchisee and franchiser with its staff. Is it therefore concluded that before taking into franchise, getting to know the franchise system is the first thing that a franchisee should know about.