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Franchise Made Simple

Written by: Sebastien Page

Article Overview: The simplicity and beauty of franchising is that it is basically a form of business where instead of starting uneasily and trying to decipher things on your own, you’ll already find plans and formats that have been applied and tested before.

Franchise Made Simple

The simplicity and beauty of franchising is that it is basically a form of business where instead of starting uneasily and trying to decipher things on your own, you’ll already find plans and formats that have been applied and tested before. The guidelines already exist and are available for those who seek them. As an owner of a franchise business, all that’s required of you is to make yourself fully aware of the tricks and the trade and the rules of the game, then simply follow them correctly.

To begin with, starting a franchise business will entail paying an upfront fee. This fee will give you access to the already established brand name of the franchiser as well as his specific guidelines to running a franchise business in the current marketplace.

There is also a monthly fee paid to the franchiser, which is known as a ‘royalty’ payment. In exchange for this payment, the franchiser will provide you with help and aid when you are in need of them.

Your franchiser can also act as a personal guide in maneuvering your way through the business world by helping you determine which location is best to set up shop, providing you with training courses, helping in promotion and marketing of the business and finally, being there to help you with any other work related issues along the road.

All in all, franchising has a lot more security than building up your own business from nothing. Almost all details are laid down and mapped out beforehand, leaving very little to worry about. You will simply be required to follow rules and procedures and work hard at making your business a success.

The US department of Commerce indicates in a study carried out over 7 years that more than 90% of all franchises turn in a profit steadily. Compare this to businesses set up by individuals outside of franchising, where up to 80% of them end up biting the dust and disappearing as quietly as they came on the business scene within an average time period of 5 years. This high failure rate is usually a combination of naivety regarding the business world, poor knowledge of the product and its potential and general lack of experience. While trial and error are good learning experiences, banks aren’t too patient when shutting down your business operation, if the cash isn’t coming in as quickly as it should be.

However, with franchising there will be certain restrictions on the business operation. There will be predetermined tools set for your disposal between suppliers and computer systems, all of which have been handpicked by the franchiser. You will also be operating under certain conditions that ensure to the franchiser that his reputation will remain intact and suffer no damages.
This maybe very difficult for highly independent entrepreneurs who value their freedom a great deal.

So while you’ll be going into business for yourself, franchising is still a form of partnership where all parties involved have to cooperate and work hard to ensure their business’s success.

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Article Tags: brand name, business scene, business world, current marketplace, department of commerce, failure rate, franchise business, franchiser, franchises, marketing, own business, personal guide, royalty payment, rules of the game, simplicity and beauty, time period, training courses, upfront fee, us department of commerce



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: New Infographic: Top Ten Reasons to Partner with Someone - I like it. Simple yet informative. I also RT'd it for you.


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