franchising aspects Dec, 11 2009

Take your business to the next level

Every established businessman aspires to take his business to the next level and earn maximum profits. With franchising becoming popular globally it is suggested to convert into franchisees. Read on to know more about yet another term, Conversion franchi

By Abha Garyali
Sub Editor
Take your business to the next level

As the name suggests conversion franchise refers to a situation in which an already established businessman is offered the opportunity to convert his independent business into a franchised business. This model of operating business is different from traditional franchising. Therefore conversion franchisees are the established businessmen with prior experience and business acumen. Moreover in this franchising model the aspiring franchisee has to give up on his own brand and has to take the brand name of a successful franchise organisation.

Reasons of popularity of this concept

The concept of conversion franchise is beneficial for both the franchisors and franchisees. The franchisor is benefited in a way as he gets an opportunity to offer franchise to an experienced person who already runs a business unlike in the case of traditional franchising. The conversion franchisee needs less training and support as compared to a new entrant in business.

For franchisees

Every established businessman aspires to grow his business and earn maximum benefits. The key issues for growth are the resources used to make your business grow.  For businessmen who aspire to grow but lack the resources is best suited for conversion franchising. Conversion franchise is becoming popular in the recent times because many established businessmen are taking the franchised route.  Conversion franchising helps these businessmen in converting their store into a popular branded outlet. Let us have a look at some other reasons for turning to conversion franchise.

Greed of doing better: A few independent businesses do very well as their products and services have been accepted by the clients. But still they aim to make it better and bigger. The increasing awareness of brand consciousness among consumers is another reason of businessmen converting into franchisees.

Fear of failure: Many businessmen in fear of shutting down their business due to low footfall convert themselves into franchisees. This fear of failure makes them turn to conversion franchise. It is most popular in the beauty salon industry and education sector.

Better training and support: A conversion franchisee gets several types of supports like training, guidance and advertising techniques from the franchisor. There is no doubt that they are more experienced as compared to franchisees that are new. But no one can deny the fact that guidance from bigger and more experienced companies would add to their betterment. This is another factor that can attract the independent business owners.

Limitations of a conversion franchise

This appealing prospect can also prove disastrous to businessmen who converted their independent businesses to a franchise hoping to increase their sales and profitability. It is well-known facts that in franchising the franchisees have to pay a franchise fee and continuous royalties to the franchisor. The same procedure follows in conversion franchising as the franchisee has to deposit a huge amount of franchisee fee and a share of his sales to the franchisor. It is a continuous process and can bug any franchisee. Moreover the advertising costs and other monthly expenses by the franchisor can further mean lesser amounts of earnings for the franchisee who had hoped for increase in his income.

If you as an independent entrepreneur have similar thoughts to make your business a conversion franchise, measure the pros and cons carefully. Take the decision cautiously as it means making or marring your business.

Related: Perfect partners develop profitable franchise

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