BUSINESS UNDER LICENSE: HOW DO I OPEN A FRANCHISE?
Business under license: how do I open a franchise?
Start your own business without reinventing the wheel and breaking through place in the market in a tough fight with competitors?
Immediately get a name, customer recognition, and working business model? Possible.
If you are a franchisee of a well-known and successful company.
About the pros and cons of such a business solution, as well as how what you need to consider when starting to work on a franchise, I told coach of Moscow Business School Anna Bocharova.
Photo Anna Bocharova Anna Bocharova is a practitioner in the field of sales organization and business development of companies, an expert on business diversification, a business coach, and an organizational development consultant. Author of the books ” Retail store. Where to start, how to succeed”, “Effective sales Department: personnel, tactics, strategy”, “Management for non-Starters”, “Crisis management of the store” and “the careerist’s Handbook”.
ADVANTAGES OF DOING BUSINESS
Advantages of running a franchise business
Franchising is a form of licensing in which one party grants the other a paid right to act on its own behalf using the franchisor’s trademarks and / or brands. What are the advantages of working for a large and well-known company?
Entrepreneurs are offered ready-made, time-tested products
and industry markets solutions that relatively guarantee
getting a positive financial result, which is,
in turn, it helps to avoid many losses:
both temporary and financial.
For example, the successful Dodo Pizza franchise provides its customers with
partners purchase matrices for equipment, ready-made
staff instructions, working marketing materials
and much more. The chain has 22 pizzerias and 28 more are located
in the opening stage. So, in Smolensk, the delivery point has started working
2 288 868 rubles.
SUPPORT FOR THE OWNER COMPANY
Some franchise owners offer consulting support programs for their franchisees and, in fact, “lead” the company during its formation on the territory. Sometimes business partners can share certain resources, such as logistics, legal, and raw materials. The amount of such support is determined in the contract and is one of the conditions for the attractiveness of the franchise.
HOW TO CHOOSE
How do I choose the best conditions?
So, the decision to work on the franchise has been made, now you need to decide on the details and choose a franchisor.
When choosing conditions, consider your financial condition as real as possible. Whether you have enough funds, if, for example, the terms of the franchise provide for a lump-sum payment in a significant amount, how much free money will remain after it is paid. Lump-sum payment — a one-time payment to the franchisor for entering the market under a well-known trademark.
BUSINESS TO YOUR LIKING
Evaluate the product / service / technology you have selected that is being passed on through the franchise. Do you believe with the success of the business?
THE COMPLEXITY OF THE TRANSLATION
Many foreign brands require verification of the business reputation of a potential new franchisee, a certain amount of purchase, and strictly control the implementation of requirements for working with a brandbook, including significant penalties for non-compliance with standards in the contract. In Russian practice, every year there is a noticeable softening of requirements for new partners. Consider these circumstances when choosing a future business partner.
During the initial negotiations, the overall picture of the relationship will help determine the choice of a partner. Evaluate how carefully and in detail the representative of the franchisor answers your questions and doubts. Does the referral Manager provide information and documents in response to your requests? Is information about other franchisees of the company open? Are there any real examples of success?
If the answer to all questions is positive, you like the products that you are going to produce under the franchise, and you have enough money to interact with the franchisor, then feel free to go to the conclusion of the contract.
In the process of choosing a franchise, it is useful to create a check-list, in which you need to enter specific questions to the franchise owner. Pay attention to the terms of granting the right to use the trademark and product, specify how much, for what specifically and with what frequency you will pay the franchisor.
CONSIDER THE FINES
Pay special attention to the issues of mutual responsibility of the parties for the implementation of agreements, work out together with a lawyer in the penalties provided by the partner, and ensure that your interests are protected in case of violation of the franchisor’s promises.
ALL CHANGES TO THE AGREEMENT-ONLY TOGETHER
Based on Russian practice, you can make a recommendation — do not include in the agreement the possibility of unilateral changes to the terms of cooperation, describe in detail the procedure for approving and making changes to the relationship between the franchisee and the franchisor.
AT A MINIMUM
Risks – at a minimum
So, the contract is concluded, and you start working under the franchise. Here are some tips for your business to thrive.
TWO MANDATORY RULES
The risks of a franchisee are exactly the same as the risks of running any other business. You can manage them if you follow two rules: document your relationship with each partner and consider each work situation from a different management perspective.
A SPECIAL PATH IS NOT FOR YOU
All stories of failure in Russian franchising practice in 90% of cases are associated with the failure of the franchisee to comply with the requirements and recommendations of the franchisor. All attempts to “go your own way” run counter to the serious analytical and planned work of employees of the franchise Department and often contradict industry trends. As a result, we see the failure to achieve the desired business results and disappointment in the very idea of working under the mentorship of a strong and experienced brand.
FEAR HAS BIG EYES
Many novice franchisees sincerely believe that the franchisor will eventually “throw” them out of business, taking the territory already known to the end user and starting to work independently. Such fears are groundless and are typical for those companies that are not attentive to the essential terms of the contract or do not have extensive knowledge of management.
And remember, if you believe in your own success, regularly undergo training in various aspects of business from personnel management to marketing strategy, you will be able to withstand any difficulties with dignity.