Everything about Franchising Start-ups

Franchising is described in businessdictionary as 

`Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications.` 

But in this article, I will try to give you more practical information than theoretical.

 Franchising basically gives you right to use the trademark and the products or services of the company. The funny think about franchising is neither you are the owner of the company nor worker of the company. Usually, you are paying start-up fee to the franchiser (Ex; McDonald's, Burger King etc) and monthly you are sharing your profit with the franchiser as a loyalty. However, this payment methods can be changeable according to company. Like every business model, franchising has it's benefits and harms. 

Benefits of Franchising;

• You don't have to find an idea or a new business model to establish a company. You have already established business with his organizational culture and techniques which make your job to success much easier. 

• Usually when you are starting-up your business, the hardest way is gaining customers. However, if you are the franchisee of  well-known brand, you have no problem about gaining customers or reputation. Because you are starting your business directly with them which is big advantage.

• The Franchiser will help you in every aspect of the building your franchise. You will have a no problem to find high quality equipment and materials. Simply, you don't have to search the market, everything is ready.

• Another thing that your franchiser will provide is supplier connection. Again you don't have to worry about how to find a supplier or manage it. Because you will use the ready system.

Harms of Franchising

• The biggest problem about franchising is YOU ARE NOT A ` REAL` BOSS. Yes, you are a boss but you have no authority. You can not change anything about operations even they are harmful for you.

• You can not change the supply network. If you find cheaper or better distributor for your product or service, you can not switch it. Because you have no right to do that.
• The franchising business is a big network. Like you, there are others all over the country or world, people who have the same franchising. If they damage the reputation of the franchiser company, it will be harmful for you also. You did nothing but you got damage because of others.
• As I mentioned above, you have to share certain amount of your profit with the franchiser company. You run the business, you face with the difficulties. Because they have trademark, you have to share your wallet with them. 

So those are the advantages and disadvantages of franchising. Of course, like every business it has risks and growth potential. If you want to make a business in franchising you have to make research well. But before that I have some tips for you;

Use Virgin Countries

As I mentioned in Emerging Economies: Heaven or Hell? article, choosing virgin countries for franchising can make huge different for your business.  If you open KFC in your neighborhood which has a lot of big fast-food restaurants, who cares? You can not make a big difference and be a boss. But if you open KFC in a country, which doesn't have KFC. You are getting to top directly whether you will continue to be on top or fall is totally up to you.  

World Map of KFC chain in the world.

Choose Your Location Wisely

Most people are locating their company near where they are living. But that doesn't mean there will be a lot of customers. If you are a fisher-man you have to go to where fishes are. You can not expect from fishes to come to you.



Find your Passion

Just because that business has a lot of money, don't jump that. If you love cooking, find a firm of franchising which allows you to cook. If you love computers, try to find a company's which allows you to work with computers. Don't jump food business because it has money if you have no interest.


Try to gain people, not lose

Losing people in business is much more easier than gaining. Don't be the ones who lose, be one who gain people. It will help you to build new connections and new business opportunity to expand your business chain.


Conclusion

Franchising is a hard process and often needs good nerve system to compete in the market. Since you are starting directly from top, you will have competitors who are tough. As risk and stress increase, of course profit is increasing. Customers will trust you more if your trademark has good reputation easily and it will open you a door for good profit. All in all, people who want to look up franchising business, I'm suggesting you to learn details about every company by telephone or e-mail otherwise internet is full of rubbish about franchising. Again, I recommend you to investigate market before make any operation.