Franchising has always been a pace keeper for any business, however there are a few pointers that should be carefully kept in mind while choosing a franchise of a business and adhering to the role of a franchisee
Various brands, may it be big scaled ventures foraying big opportunities or may it be investment opportunities allocating reasonable investments share a few common threads that defines the opportunity suitable for the perfect investor.
A lot of people believe that running a franchised business is like having a piece of a pie as the franchisor is the puppet master of the show and franchisees are the money collectors from the people. Well, breaking the harmony, it’s very simplified that revenues do not come from showcasing giant numbers or deceptive marketing tactics; however revenues come from smart business models designed to eradicate the demand and hence generate profits.
‘Franchising’ if opted as guided entrepreneurship can surely change the face of any franchised entity and hence can prove to be a game changer for a franchisee. A franchisor and a franchisee should have a connection as a beehive shares with the queen of bees, while the franchisor is the core of the business as the queen and the franchisee is the bee which collects money according to their expertise in a specific area like the bees do for honey.
However, there are a few key points that need to be kept in mind while settling for a franchise of a business.
It is very necessary for a franchisee to thoroughly study the franchising agreement that allocates the mutual responsibilities of both franchisor and franchisees. The agreement carries all of the vital and legal information varying from the duration of the agreement to the amount of the franchise fee (An up-front entry fee, usually payable upon signing of the contract). Franchise fee is just an initial fee to sign a franchising agreement but a continuing payment is charged for compensation for the continuing services given by the franchisor (for training, field services, etc.) which is called as Royalty Fee and is payable on a periodic basis, which can be, weekly, biweekly, monthly or throughout the franchise agreement.
Related: Franchise agreement checklist
Keen on Interest
Various franchisors offer a franchise streaming a FOCO (Franchisee owned Company operated) model and hence just require capital from the franchisee. This model is usually operated within stand alone businesses dependent on the sector and how unorganized it is. Although, people with a good financial stat can surely go for this model, sit back and relax while the company operates the franchised outlet for them. However, there is a huge number who want to showcase their skill and expertise through devoting their 100 per cent in to the franchised business.
The franchisor mainly requires that the franchisee should be having connections and networking leads in the area where he/she is opening a franchised business. This helps the franchisee to create a connection in the locality and become a face value of the brand in the particular area.
Himanshu Jain, Sen. V.P, Career Launcher:“Franchising helps to explore social connects and reputation of the franchisee in that city thereby creating a sense of trust and confidence in the customer (student in our case). The local partner will have better access to schools and colleges than someone from the corporate office.”
Following the Ideology
Entrepreneurship to franchising is not at all an easy journey and it takes a lot of hard work to increase your reach while maintaining the core of the business. However, the biggest ally for transformation from entrepreneurship to franchising is standardization and is very much necessary for a successful franchised entity. The franchisee needs to understand that it is his duty to follow the USP of the brand and grow via its core ideology.
Suresh Bhatia, Director, SB Fabcare Pvt Ltd. “A franchisees contribution in terms of knowledge, investments and expertise really matters, time that he or she could spare on and many other relevant aspects need to be weighed before arriving at the right partner.”
The Supporting Brotherhood
As it is really important for a franchisee to setup a franchised business with the help of the franchisor, it is equally vital for a franchisor to fully support the franchisee from selecting of the place till the start of the operations. The franchisee should be treated as a part of the franchisors family as he/she is the one taking the franchisors name forward, increasing its reach and generating profits for the brand.
Richa Kar, Founder, Zivame: “Training & support is an integral part of any franchise model. We will be focusing on every little detail so that the brand does not get diluted in the process of expansion. For the franchisee owner to get the nerve of the brand, we will provide in-depth product knowledge and training by sharing the brand research in terms of breast profiling, training on fit advisory and customer support policies.”