Franchising TNT

Franchising means the way of doing business on the basis of other person’s philosophy of business. Here a franchisor, the owner grants the right to an investor or entrepreneur to market his companys goods or services to increase its brand visibility. For using the rights, the investor gives some percentage of gross monthly sales and a royalty fee to the franchisor. Some examples of today’s popular franchises are McDonald’s, Subway, Domino’s Pizza, and the Levis Store.

If you want to leverage the benefits of franchise business, take help from some experienced franchise consultant. Such consultants would help an investor to choose the best franchise business. In fact, today investors and entrepreneurs prefer to invest their money wisely under the guidance of a franchise consultant for various reasons, such as:

Evaluation of business scope

A franchise consultant first tries to understand the type of business that would suit an entrepreneur. A detailed analysis on the profile of the entrepreneur in lieu with their goals, skills, resources, experience and background help to get an idea about what are the best franchise opportunities for an entrepreneur.

Analysis of financial resources

To start a franchise business, an entrepreneur needs to make investments. A good consultant helps entrepreneurs to manage their capital in a more profitable manner. They will also guide on how much one should invest initially and from where loans and other financial helps can be arranged.

Help in making a choice

As such consultants are part of the franchise industry; they have better knowledge of the industry, their positive and negative aspects. Their contacts and expertise ensures that entrepreneurs invest in top franchise opportunities that they can run successfully.

Thorough research

With a franchise consultant, entrepreneurs get to know about the competitive analysis of the leading franchise companies. Suppose you want to invest in beauty industry then the consultant will provide you what leading companies are expecting from an emerging market or particular location.

Analysis of location

Knowing the markets from a consumer perspective and analyzing the growth allows the consultant to understand a location in a much different way as compared to a prospective franchisee. Plus, a consultant also has idea about what type of location will be beneficial for a particular type of business.

Meeting with existing franchisees

For starting a franchise business, it is essential to talk to some of the existing franchisees. But where can one get the details of the existing franchisees? Professional franchise consultants know exactly how to fix a meeting with existing franchisees. This definitely helps a new entrepreneur to understand the business in a better way.

Legal agreement

A consultant also helps an entrepreneur during the franchise agreement sign up process. They help you to understand the legal terms in a better way before the sign up and fees are transferred and the final agreement is signed.

Well, all these above mentioned points clearly points out that an experienced reputed franchise consultant would always ensure a better franchise deal.

What are the kinds of businesses are popular in the Philippines today? According to many experts, franchise businesses had become a popular trend in the Philippines. And part of the reason why businesses is because of the many new franchise available in the market, such as food-cart and food-stall businesses which are considered today as some of the most wide-spread businesses in the Philippines today.

Popularity of Franchise Businesses in the Philippines
According to many experts, franchise businesses became popular in the Philippines because of the many new franchising concepts which gave Filipinos the opportunity to own a profitable business. This is when food-cart and food-stall businesses were introduced in the Philippine market. And unlike other franchise businesses, these franchises are far simpler and smaller.

Benefits of Small Franchising Businesses
Unlike in the past in which most franchise businesses in the Philippines were large businesses, such as convenient stores, fast-food restaurants, and many more, food cart-and food-stall businesses are smaller, which could only occupy a small space in a high foot-traffic location, such as in malls, shopping centers, bus and train terminals, and even in wet markets and sidewalks.

Because of its versatility and flexibility, these types of franchising businesses became popular among many Filipinos who are looking for a simple business that they can easily manage by themselves.

But other than its simplicity, another reason why food-cart and food-stall businesses became popular is because of its lesser expensive franchising cost compared to other franchise businesses in the Philippines, allowing more Filipinos to have the same opportunities that many wealthier Filipinos have had with Franchising business Philippines.

No Requirements Needed
Unlike larger franchise businesses, which normally requires one to have experience in management as well as have attained an MBA, these small and simple franchise businesses usually don”t require anything other than the franchising fee. And although its more expensive than starting a business from scratch, these businesses, however, can offer Filipinos the profitability that start-up businesses usually lack.

Business Loans for Franchise Businesses
Business loans had also gained a lot of popularity in the Philippines because of franchise businesses. A popular example of those that offer such services is Ka-Negosyo (business-partner) by BPI. It is a branch in BPI which give Filipinos the advantage of franchising a business, or starting their own business, by giving them the capital they needed.

Ka-Negosyo is one of the few popular loan firms in the country that can offer Fast cash loan Philippines which gives them the opportunity to acquire their capital faster compared to other loan firms in the Philippines.

The word -franchise- or -franchising- has already created a buzz in the business world. There are thousands of companies worldwide who are franchising their business for optimum exposure of their brand. In fact, franchising is the single most successful marketing concept ever used worldwide for distributing goods or services to consumers.

The franchise business has been around a long time, but have you ever wondered how the concept of franchising came into being. First the word -franchise- is derived from the Anglo-French word meaning -liberty- or -privilege or freedom-. The concept of franchising had to start somewhere. The origin of the concept dates back to 1850’s.

Evolution of Franchising

During the 1840’s, a major German beer brewer granted certain rights to some particular taverns to sell their beer by using the trade name SPATEN. This concept initiated the concept of franchising that became familiar to most of us in the twentieth century.

However, the credit of popularizing the concept of franchise opportunities goes to none other than Isaac Singer who invested the Singer Sewing Machine. Singer was looking for an innovative way to distribute the sewing machines manufactured by his company over a widespread geographic area. This is when he realized the benefits of franchise opportunities to market his products. Singer was also the first one to prepare franchise contracts. These documents then became the basis for the modern version of franchise agreements.

Franchising during late 1800’s and early 1900’s

Late 1800’s and early 1900’s was the time period when the concept of franchising became more popular as more and more companies started franchising their business. Mainly street car companies, oil refineries and auto manufacturers found that through franchising they can sell their products over a larger geographical area. During this time frame, some of the popular companies that began to franchise are other Kentucky Fried Chicken in 1930, Dunkin Donuts in 1950, Burger King in 1954, and McDonald’s in 1955. These companies took the concept of franchise business to a whole new level by creating some of the best franchise networks in the world.

Franchising in the modern era

The present day concept of franchising became popular post World War II. After the conclusion of the war there was a huge demand for many products and services. Subsequently, to take advantage of the situation many more companies joined the bandwagon of franchising. This led to rapid expansion of franchising in the 1960’s and 1970’s. But during this time there were many companies that went bankrupted due to poor fund and management and this hugely affected the franchisees.

Such unfortunate events led to the formation of the International Franchise Association (IFA) and Federal Trade Commission (FTC) to regulate laws related to the franchising industry. In 1978, the FTC created the Uniform Offering Circular (UFOC) which was later renamed as Franchise Disclosure Document (FDD) in 2007. These documents made franchise companies to provide detailed information to potential franchisees and that too in written format. This really helped in making franchise business successful.

Today, there are thousands of successful best franchise brands that provide products and services to consumers all around the world!

FIHL is your best source for information about new franchises business options and best franchise opportunities in the market. Here you can get all the tips required for owning the best franchise business and lots more.

For ones to reach the heights in the business world we need franchising – a licensing arrangement in which a business owner, known as the “franchisor,” markets a trademarked product or service through affiliated dealers known as “franchisees.” While these franchisees own their establishments, terms of franchising agreements typically require them to share operational responsibilities with the franchisor.

Equivalent to success rates, the franchises also tend to have a higher rate of risks and can fail for any number of reasons like any other business. So therefore proper investigation is to be done before buying any franchise.

Types of Franchises:

Business Format Franchises: With this a company expands by supplying independent business owners with an established business, including its name and trademark.

Product Franchises: Here manufactures control how retail stores distribute their products. Through this kind of agreement, manufacturers allow retailers to market their products and to use their names and trademarks.

Manufacturing Franchises: Through this a franchisor grants a manufacturer the right to produce and sell goods using its name and trademark. This type of franchise is common among food and beverage companies.

Business Opportunity Ventures: Business opportunity ventures involve an independent business owner buying and distributing the products from one company.

Mid-sized franchises like restaurants, gasoline stations and trucking stations involve substantial investment and require all the attention of a business person.

Right franchise is totally based upon:

What are your interests?

Do you want to develop multiple units?

How easy it to resell your franchise and what are the restrictions or costs from the franchisor?

What days or hours you want to work?

Advantages of franchising:

Branding: The first thing Franchises offer franchisees is a strategic identity that is not only effective, it has cumulative market impact. A successful brand is one that is remembered, and Franchises have some of the most successful brand identities in the world.

Advertising: Advertising can be one of the biggest expenses for any new business and for good reason. You cant survive without effective advertising and effective advertising is expensive.

Name Recognition: People today want guarantees like never before and name/menu/brand recognition gives them that assurance.

Reputation: The reputation of the franchise is important enough, it is what breeds positive expectations that keep patrons loyal, but this benefit coupled with a built-in umbrella of legal protection is an incredible bonus and one you cannot get as an independent.

Disadvantages of franchising:

You are exposed to fraud. If you fail to investigate the background of the franchisor or youre taken in by promises of quick profits with low franchise costs, chances are, you will just find yourself holding an empty bag.

When you buy a franchise, you are not free to do your own thing. You dont have much control on the products that are to be sold, the system that should be in place and, even, the location and general look of your business establishment.

Costs may be higher than if you are going to start your own business from scratch. Other than the initial cost of acquiring the franchise, you may also pay an agreed percentage of your sales and marketing or advertising fees.

A franchise is a business arrangement in which the owner of a business (franchisor) grants certain rights of that business to another party (franchisee) in exchange for financial consideration. It is a common method of expanding a proven business, although it also has specific disadvantages. These primarily include the amount of preparation required to create a franchise, the reduction of income in the short term and the loss of control over the franchisees.

Preparation

Franchising requires considerable preparation in order to have the best chance of success. You will need to run a pilot operation separately from your main business for a sufficient period to ensure you are using a sound business model. This model must be simple to learn, yet not so simple that competitors can easily copy it. The following problems are common when preparing a franchise:

The business produces a widely available product.
The franchisors are not capable of running the business according to your model.
You incur a moral obligation to ensure the franchisee is successful.
Insufficient support staff during the franchise’s startup period.
Profit

The business must generate sufficient profits for franchising to be worthwhile for both the franchisee and franchisor. A business with low gross profits is usually a poor choice for franchising, unless you are able to generate turnover quickly. The franchisees must earn sufficient income to pay the franchise fee to the franchisor, while still making a profit commensurate with their investment of time and money. The challenges in making a sufficient profit with a franchise include the following:

Franchisees must remain competitive while still making the franchise fee
A high franchise fee reduces the pool of possible franchisees.
The branches of a franchise generally produce a lower income than company-owned chain.
The growth of the franchise depends on the franchisor’s ability to attract the qualified franchisees.
A franchise requires startup capital until it begins making a profit.
Control

The franchisor must give up a certain degree of control over the operation of the outlets. This creates the following requirements for the franchisor:

Conduct regular audits to ensure the franchisees do not underreport the receipts. This is essential, since the turnover determines the franchise fees.
Develop instruction manuals that describe your business model.
Engage in regular communcation with the franchisees to ensure they are following those instructions.
Allow franchisees to use the trademarks and business system of the parent company.
Conclusion

Franchising is most suitable for businesses with a high startup cost, such as Domino’s Pizza, Kentucky Fried Chicken and McDonalds. Small businesses typically have greater difficulty with duplicating their business models when they create franchises. This often means the franchisee spends too much time and money supporting the franchisors.