The Truth Regarding Franchising And What Is Expected From Both Parties.
The term franchising involves a relationship between two parties, the franchisee and the franchisor. We will start with the franchisor; they provide the guidance for the business, have an identifiable brand name, a significant supply chain and give ongoing support to the franchisee. The franchisee will locate a Franchise For Sale and lay down an initial investment to the franchisor, which will form the beginning of the partnership. The franchisee will give expansion, additional profit and improved brand awareness for the franchisor and then make themselves a workable business. The franchisee pays for the business model and brand name which has been tried and tested and therefore if developed correctly should be a beginning for future gain. On top of this the franchisee will pay a specified percentage of their gross income back to the franchisor, this varies from monthly payments to yearly payments. The first investment may take several months to be recouped back but that varies with business sectors.
The Low Cost Franchise model has increased dramatically over the past ten years and is now thought of to be one of the most profitable business systems in the world. Latest research has shown that franchises represent only about a tenth of the entire number of companies in the world but the market share that they have gained is nearly a third.
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When deciding your Franchise look carefully over the agreement as there can be a lot of different versions. The different versions only differ by the total of participation a franchisee will have in making business decisions, such as advertising and marketing. Several franchises such as a fast food chains have precise regulations in place as to how the business is run while other franchises give the franchisee more options to offer other products or services and modify pricing as they see fit.
A Franchise Opportunity can be thought of a bit like a lego set, all the parts and the instructions are there it's just up to the franchisee to put them all together and build the business. The instructions will include all of the vital information such as, pricing structure, ways to market the product or service, terms and conditions, contract length, product and service information and any other conditions to do with organising the franchise. Prospective franchisees normally go through a training format to ensure that they are fully conscious of their business sector and have the necessary tools to take over the franchise and make it a hit. This training is a must for the franchisor, as this will give them a constant flow of prospective franchisees operating at the same high level.
You have got to evaluate the first investment, the monthly or yearly percentage and decide if all theses costs total up for you to buy into the franchise. Is it worth their brand name, their support and the training given to you? If you can talk to other franchisees that have been part of the same Franchise Opportunity and ask them about the gains and negatives when working for the franchisor. Ask comprehensive questions such as the total of business the franchise generates, if the training scheme is adequate, what are the monthly percentages and how much support is given to the franchisee. These questions will give you a better idea of the franchisor and if you are ready to make a commitment and find a Franchise For Sale.
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