What is franchise Business?
Franchise is business model the company sell the right to third party their business logo, name, and model.It is a method of distributing products or services. The two levels of people are involved in a franchise system: (1) the franchiser, who establishes the brand’s trademark or trade name and a business system; and (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchiser name and system.
- A business opportunity does not generally feature the seller’s trademark; buyers operate under his or her own name.
- Business opportunities tend to be less expensive than franchises and generally don’t charge ongoing royalty fees.
- Business opportunities allow buyers to proceed with no restrictions as to geographic market and operations.
- Most business opportunity ventures have no continuing supportive relationship between the seller and the buyer; after the initial package is sold, buyers are on their own.(source:entrepreneur)
- The strength of franchising is its ability to bring independent retailers using a single trademark and business concept.
- The benefits of this affiliation are : brand awareness, uniformity in meeting customer expectations, the power of pooled advertising and the efficiencies of group purchasing.
- For the individual owner, there are several advantages to franchising.
- The ever present risk of business failure is reduced when the business program has already proved to be successful in the marketplace
- The use of an established trademark saves the business owner the cost of creating and advertising a name that customers will recognize; and the advantages of group advertising and purchasing make operations more profitable.
- Training creates an instant operational expertise that would otherwise need to be acquired through trial and error.
- Franchising, expansion seems to come more naturally. Operating a successful franchise may quickly lead to building a second and then a third business, and so on. Fortunes have been built this way.
The Benefits of franchising
- Reduction of risk
- Turnkey operation
- Standardized products and systems
- Standardized financial and accounting systems
- Collective buying power
- Supervision and consulting readily available
- National and local advertising programs
- Point-of-sale advertising
- Uniform packaging
- Ongoing research and development
- Financial assistance
- Site selection guidance
- Operations manual provided
- Sales and marketing assistance
The franchise system to invest in, you want to evaluate the types of support you will be provided and how well the franchiser is managing the evolution of the products and services so that it keeps up with changing consumer expectations. Some of the more common services that franchiser provide to franchisees include:
A recognized brand name,
Site selection and site development assistance,
Training for you and your management team,
Research and development of new products and services,
Headquarters and field support,