Franchising is a way of doing business by companies for expansion without expending too much capital. Franchisors are benefited from this because franchisees use their own money to open new outlets. It clearly benefits the franchisees because they work under a tried and tested system which is more reliable than starting a new business on your own. The research reveals that 80% of new Start-ups close down within 5 years of their opening where as 80% of franchisees are still running even after 5 years.
“Be in business for yourself, not by yourself. Learn from the success and failures of others.”
What kind of businesses mostly offer for franchising?
No matter which business you can think of, even if you imagine Food and Restaurants you should first think of franchising but the franchising covers starting from A to Z involving Ad/Direct mail to construction, to marriage services, to home inspection, to security systems, to video sales and rentals. Printing & copying services, cleaners, hotels and motels, real estate, computer services, maid services, and travel agencies are nice examples of success of applying to franchise to established industries.
Major Growth Industries in “Business Format” Franchising
As the economy becomes more service and technologically dominated with more women entering the workforce and a large portion of population becomes employable and seek franchise opportunities and as another section of the population grows older, growth areas of franchising are bound to respond to these changes. The major industrial categories of franchising which are expected to show sign of growth for the start of the new decade are health & wellness related like beauty service franchisees, Gyms and alternative healing.
Service-related to fields such as home repair & remodeling, carpet cleaning, and other different maintenance and cleaning services and all business support services such as accounting, mail processing, Ad services, package wrapping and cargo, personnel and temporary help services, and printing, copying &refilling services, automotive repairs and services like quick-lube and tune-up, and other areas like environmental services, hair salons, health aids and services, computers, clothing, children services, educational products and services and telecommunication services.
It’s always necessary to study the industry growth before investing in franchise. It’s important to analyze an individual franchise company’s track record. But you should know that quick growth does not mean the sign of success. For example, the franchise organization that grows quickly may not have a service team to support all the units properly. Rather the long-range trends show the steady and solid growth in the business format of franchising. Of course, some fall invariably that is natural in business. But some become household name and being recognized as real success stories.
Business Format Franchising
As the term franchising has been co-opted by various schemes such as licensing, dealerships, distributorships, Agencies, MLM and all other pyramid schemes, the international franchising community uses the term Business Format Franchising that differentiates properly structured franchises from others in the marketplace, referred themselves as franchising. The commonly accepted definition as following:
- Business Format Franchising is the grant of License by the Franchisor to another Franchise. It entitles the franchisee to trade under the trademark or the trade name of the franchisor to make use of the entire package. This consists of all elements that are necessary to establish a previously untrained person in the business. So, it is necessary to run it with continual assistance on a pre-determined basis.
- Then, Franchise sector in India is such that all businesses are calling themselves as franchises. Hence, we go on creating a structured business format of franchising system for our clients. In Business Format Franchising, we make sure the franchisor prescribes a definite franchise plan, or system for the operation and management of the unit. This plan offers the step-by-step procedure for the major aspects of the business. While anticipating management problems, it offers a complete matrix for the management decisions faced by the franchisees which is the major advantage of buying a business format franchise. It means for the distribution of goods and services, it has been evolved, tested and associated with the trademark. Therefore, the rapid expansion of retail concept can occur quickly than through company-owned expansion.
Types of Company Franchises
It’s not just about Food! All sorts of companies starting from Fashion Retail to Bathroom Refinishing have successfully used the franchise route for expansion. Whatever may be your company or interest or business, you should consider franchising. You need to visit our sections which point out the essentials for a successful franchise system.
How can start a Franchised Chain?
Think of a store owned by an individual with a particular concept. If the business turns successful, the owner may open the second and third store and may hire employees for day-to-day operations. In that circumstance, the owner still wants to expand but not to open additional stores, he or she might have to franchise the store name and the business system to an independent business person, a franchisee. In exchange, he/she may demand for an initial fee or a continuous royalty payment. That may be calculated on the basis of percentage of franchisee’s sales. Now the business is referred to as franchised.
Do the franchises with similar characteristics have disadvantages? Do the consumers don’t want variety?
More and more mobile Indian consumers tend to depend on and appreciate the franchise products and services with consistent quality. Now days, no matter where people go, they want similar quality. That is why the consumers often stop at franchised establishments. The ability to easily identify a franchised store, restaurant or hotel from outside guarantees, there will be no surprises or disappointments in the inside. It simply means that the public knows what to expect or to like that way. Therefore, whether it’s having North Indian Food at Moti Mahal, Burgers at Mc Donald’s Shops at Subway, Groceries at Nilgiris, and Watches at Titan, Jewellery at Tanishq, Ice-Cream at Baskin Robbins or Computer Courses at NIIT, the public knows what to expect from these franchise brands.