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.