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Lesson 2: The Franchise relationship, some franchising myths.
Contents:
1) How franchises work.
As you now realise from your study of lesson 1. A franchise provides an opportunity to own your own business and be successful. That is why there is so much interest shown at Franchising Exhibitions and elsewhere, where there are a good opportunities to meet prospective new business owners. It could lead to a formal on-going business relationship between the two parties. The Franchisor has produced a business format which he thinks can be developed through the use of a number of similar outlets. The proprietary rights remain with the Franchisor, but the new business owner uses those products or services to create a greater awareness, leading to increased sales. In exchange for the resources, the tools, the services provided by his Franchisor, the new Franchise owner will be expected to pay a variety of fees.
2) What does a franchise provide?
• An easier way to be in business as a franchise owner, than through an independent stand alone unit.
Before considering whether a prospective franchise owner should seriously consider buying a franchis e and set up in a network, it would be sensible to consider what a franchise provides, as distinct from an independently run business.In a well prepared franchise network, the Franchisor trains his Franchise owners to the standards set in his pilot run, which from his experience and the advice available should produce an outlet that is profitable to both parties.An independent owner would have to start from scratch, work everything out for him self and make mistakes in doing so.The Franchisor has already made mistakes in the production, sales, delivery of the product and these mistakes should have been put right.There are many problems in any start-up operation; the more they can be eliminated at the start, the better.When franchise owners, who have not been as successful as they had hoped, are asked what they should have done more diligently before signing.
- A very common answer is not researching the company they finally chose.
- Not fully appreciating the key elements of the agreement.
3) What's already in place?
For the cost of the initial fee, the new Franchise owner purchases the right to use the brand name; it's there ready for him. He can take advantage of the Franchisor's experience, his proven methods and continuing support. While the new Franchise owner is busy running his outlet, a good franchisor will be investing in new products and ideas, arranging for bulk purchases and advertising to a wider audience. More important in any franchise at the start, is the level and quality of the Franchisor's initial training and his commitment to effective on-going training. For a stand alone businessman, this would prove expensive and adequate time will have to be set aside to make sure the same result was achieved.
4) What can you expect from a good franchise?
- A proven and successful way of doing business.
- A nationally known brand name.
- A protected market territory.
- A complete training programme with advanced training updates.
- A short cut around the common mistakes of a start-up business.
- Thorough and ongoing field and headquarters support.
- Joint purchasing agreements.
- Professionally designed local, regional and national advertising and marketing programmes.
- Contact with your fellow franchise owners providing networking, peer support and advice.
- Research and development, producing new products and services.
- A chance to own more than one franchise, if franchising proves successful for you.
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| Module 1 -
Introduction to franchising, is franchising for you? |
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