Businesses are built with a lot of hard work, dedication, hit and trial and you learn from your mistakes and want to make sure – that it grows at its pace and reap the fruits of your hard work. Is Franchising a good way to expand your successful business? Franchising is a great way to multiply your growth by distributing the cost and responsibility in a way "Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees).
The business model is based in a continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration", according to Entrepreneur®.
Answer these pointers keeping in mind your business.
Veluce Professionals are experts in distribution channels and Franchising systems. But how will you figure out that franchising is the way for your business to achieve its next level of growth lets make a business brief for yourself -
- unique selling proposition
- Industry Success Ratio
- Credibility
- Integrity and commitment
- Public Acceptance
- Potential for National Adaptability
- Profitability
- Financial control
- Cash requirement
- monitoring system
Also, take in consideration the following Pros and Cons
Pros of Franchise Businesses
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Established Brand and Customer Base.
By far, the biggest advantage of buying into an established franchise is the strength of the brand and loyalty of its customers.
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Marketing Support.
Franchises often have the support of a national campaign, as well as prepared marketing materials for a local campaign.
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Reputable Suppliers.
Franchisors often have established relationships with suppliers for all the materials franchisees need.
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Business Support.
There's a saying in franchising: "You're in business for yourself, but not by yourself" because you have a network of support.
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Training
Some of the better (and more expensive) franchise operations offer management and technical training.
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Financial Assistance
Some franchisors provide loans and other assistance to help franchisees.
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Access to Proprietary Methods
There's no need to reinvent the wheel as franchisees get access to all the trade secrets.
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Ongoing Research and Development, New Products.
Franchisees can stick to improving their operations and let the franchisor spend the time and money developing new products.
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The Boss is You
As with owning any business that you own, you are in control of your destiny.
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Reduced Risk
For all of these reasons, starting a franchise of an established brand often has less risk than starting a business from nothing.
Cons of Franchise Businesses
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Initial Payout (Franchise Fee and Start-up Costs).
Some of the bigger franchise operations can involve a very large initial costs, often more than what it would cost to start your own business.
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Royalty Payments.
For as long as you are a franchisee, you will have to pay some percentage of the monthly gross back to the franchisor, reducing your profit potential.
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Marketing/Advertising Fees.
To receive the wonderful marketing support from the franchisor, franchisees must pay these fees, according to some contracts.
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Limited Creativity/Flexibility.
Most franchise contracts have very explicit standards, allowing little or no alterations or additions to the brand, stifling any creativity on the part of the franchisee. You must use their system, follow their rules.
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Sole Sourcing.
Some franchise contracts stipulate that franchisors must buy supplies only from an approved list of suppliers, possibly at a higher cost.
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Locked into Operation by Long-Term Contract.
If you don't do as much research as you should have and find yourself with the wrong franchise, you may be stuck for many years.
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Dependent on Franchisor Success.
The reputation of your franchise is only as good as that of the franchisor, so any difficulties that the franchisor encounters will have a direct impact on you.
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False Expectations.
Opening a franchise rather than starting your own business offers no guarantees of success. You still need to be a sharp businessperson to make it work.
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Risk.
There's always risk in starting any new business.