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Aug, 12 2014

Unlock the secret of franchise business

Behind the successful franchisor is the viable business model that offers a best bet to franchisees. So, make sure that you build a stronger business model that is able to sustain profits for an unlimited period.

Franchising is a business model that combines the best aspects of sole proprietorship and entrepreneurship. It can be described as a 'hybrid' model that fills the gap between owning a business and working for somebody else.

Franchising provides a good opportunity to an investor for leveraging an already established concept. The franchisor typically provides complete support in terms of training, staffing, marketing, etc. It can be easily inferred that the franchisor is looking at expansion of its brand footprint while the franchisee is looking at establishing own business but with limited risk. This concept seems like a perfect fit for a franchisor-franchisee relationship. In reality, there are many factors that are examined before a franchisee deal is converted. The decision to invest remains a challenge for the prospective franchisee due to many factors involved.

It is extremely important for a franchisor to make an attractive and viable model for successful franchising. It's important that a franchisor is aware of all the factors that are evaluated by a prospective franchisee. These factors are:

= Investment amount

= Other financial terms (like payback period, ROI, royalty, margins, etc.)

= Preferred industry

= Brand equity (well-known brand)

= Business concept

= Training support provided by the franchisor

= Overall comfort with franchisor

= Degree of independence provided by franchisor

= Understanding of business

The franchisor must make the business model to provide complete comfort on all the above factors for successful franchising.  For instance, Quick-service restaurants (QSRs) are one of the most successful franchised models in India. This evidence proves that businesses that have proven their business concept at small investment amount along with establishing standardised processes and solutions will be most successful. Examples of QSRs will be McDonald's, Subway, etc.

Pre-school is another category that is rising in the world of franchising due to their viability and quick payback. Apart from these factors, this business also provides the owner with the reputation of owning an education business. Examples of pre-schools will be Euro Kids, Kid Zee, Treehouse, etc.

Building an attractive and viable business model is the foundation of a brand with long-term perspective for successful franchising. Weak and quickly-built franchise model cracks the foundation of the greatest brands and affects the parent company too in the long-run when the franchisee businesses start failing after 2-3 years time. Therefore, it is best to consult the expert consultants in franchising domain who further help in building a right business model.

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