Franchising is an easy way out for a businessman,this saves one time taken to start up a business with no proof that it will succed.In franchizing an investor needs to pay an amount and he is given the way to run the business smoothly and successfully and this comes with the advantage of a strong reliable brand .
Definition: A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration. Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees). .
If buying an existing business doesn’t sound right for you but starting from scratch sounds a bit intimidating, you could be suited for franchise ownership. Just what is a franchise–and how do you know if you’re cut out to be a franchisee? Essentially, a franchisee pays an initial fee and ongoing royalties to a franchisor; in return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor’s system of doing business and sell its products or services.
In addition to a well-known brand name, buying a franchise offers many other advantages that aren’t available to the entrepreneur starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.
Reputable franchisors conduct market research before selling a new outlet, so you’ll feel greater confidence that there’s a demand for the product or service. The franchisor also provides you a clear picture of the competition and how to differentiate yourself from them.
Once you’ve decided on a certain franchise through your preliminary research, you need to find out if this opportunity is as good as it sounds. Your next step is to analyze it thoroughly to determine whether it’s really worth buying.
Sourced from: https://www.entrepreneur.com/encyclopedia/franchising
In this case you don’t need to come up with a new idea.Get s franchise of an already established product with a brand.You will be provided with ingredients for the actual product,training for tyour staff and also advertising ,this is after paying an agreed amount.
The principle is simple – rather than developing company-owned outlets, some businesses instead expand by granting a franchise to others to sell their product or service. There are clear advantages to both franchisors and franchisees, just some of which are:
- You don’t have to come up with a new idea – someone else has had it and tested it too!
- Larger, well-established franchise businesses will often have national advertising campaigns and a solid trading name
- Good franchise businesses will offer comprehensive training programmes in sales and, indeed, all business skills
- Good franchise businesses can also help secure funding for your investment as well as, for example, discounted bulk-purchases for outlets when you are in operation
- If customers are aware that you are running a franchise business, they will understand that you offer the best possible value for money and a consistent quality of service – although you run your ‘own show’, you are part of a much larger organisation
- You grow the business and, when you are ready to move on, can sell it for a profit
Who is in control?
Each franchise business outlet/unit is owned and operated by the franchisee. However, the franchisor retains control over the way in which products and services are marketed and sold, and controls the quality and standards of the business.
What are the cost implications?
The franchisor will receive an initial fee from the franchisee, payable at the outset, together with ongoing management service fees – usually based on a percentage of annual turnover or mark-ups on supplies. In return, the franchisor has an obligation to support the franchise network, notably with training, product development, marketing and advertising, promotional activities and with a specialist range of management services.
Sourced from: http://www.thebfa.org/about-franchising