Franchising TNT

With the advent of global players in the arena the whole perception of the business has changed. Franchising business has become a trendy business formula these days and is gaining strong grip in India. We can claim that it would be the wave of future business in the country.

Franchising is the practice of doing business involves the use by a person (franchisee) pursuant to a license of another persons (franchisor) business model, name, image and business identity along with his confidential know-how to make use of intangible assets in a particular territory for a specified period with or without assured financial return to the franchiser. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods and avoid investment and liability over a chain.

This model of business works best in businesses with a good track record of profitability and businesses which can be easily duplicated.
Though franchising business in India has witnessed impressive growth of around 30-35 percent over the last 4-5 years with an estimated annual turnover of $ 4 billion, this is a mere fraction of the potential that India can offer. According to the estimates of the Indian Franchise Association, there would be at least 50,000 franchises in the Indian market in next five years.
India is one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent on spending and because the population is entrepreneurial in character.

A huge consumer base of over a billion people including a flourishing class of urban consumers having substantial disposable income with quality and brand awareness is instrumental in attracting foreign enterprises to the country. A good number of international players are planning to enter the fast growing franchising market in India.

Business franchising agreements are commonplace, and tens of thousands of these contracts are signed every single day around the world. More often that not, the agreements underpinning business franchising arrangements are written by qualified and skilled commercial lawyers experienced in this kind of arrangement. However, thats not always the case, and many business owners choosing the franchising route consider a DIY approach to contract formation, which carries with it its own risks and pitfalls. Whichever route you choose, there are a number of key contract terms you should look out for in franchising agreements that are of importance to both the franchisee and franchisor.

A crucial set of terms included within the typical business franchising agreement are those relating to payment. Business franchising is a worthwhile agreement for both sides, but the payment terms stipulated are of critical importance in determining whether or not its good value all round. Normally, business franchising agreements are comprised of an initial upfront payment along with a periodical payment of royalties, although this varies to a greater or lesser extent. Understanding the exact nature of the payment terms of the agreement will enable you to determine how much you will be required to pay as a franchisee, and will allow you as a franchisor to calculate how much income can be generated from the franchising business model.

Another critical term to look out for, particularly as a franchisee, are those relating to the resale of your franchise, which can determine whether or not a business franchising agreement is. Some franchising models prevent resale without the permission of the franchisor, whilst others requiring strict interviewing of new prospective franchisees or even prevent resale altogether. This can obviously have an impact on whether or not the deal turns out to be good long term value, and it may have an impact on whether or not you should opt for that particular franchise package.

As a franchisor, you should look to include provisions within the contract relating to pricing control, or generally as to the autonomy afforded to the particular franchisee. The business franchising relationship is one of greater or lesser autonomy, and you need to decide how much freedom to give to your franchisees. Remember its your business at the end of the day, and you need to be sure you want to surrender some degree of freedom and of where you want to draw the line. Establishing this within the business franchising agreement will solve any problems that may arise later down the line.

Business franchising can be a particularly profitable business model for both sides of the agreement, but the agreement itself must be watertight to begin with in order to avoid problems as the agreement progresses. By making sure your business franchising agreement is complete and tackles all the relevant issues head on, from payment to resale and beyond, you should be able to prevent disagreements and make sure that both sides understand their rights and obligations as pertains to that business franchising agreement.

Expanding of business at the same time involving interested entrepreneurs in the same has of late gained big momentum. Opening of chain outlets or stores no doubt add to the extensive market presence and an enhanced brand identity. But that involves a good amount of investment besides liability and other factors associated. This is where a franchise business comes into play. Franchising, the practice of using another firm’s successful business model, had been at a nascent stage for quite some time. Today, it is not only in India but also across the world that franchise business is gaining impetus. Offering franchise business opportunities, concerned companies not only see their business expand even beyond geographical boundaries but also get returns. No investment, no maintenance, no liabilities! The franchisor’s success is the success of the franchisees.

Explore the various segments where franchise business opportunities are offered, consider your interests and accordingly choose the right company. If you choose a reputed name, you can look forward towards making some big money in no time. Building a brand rapport takes time and when you get a brand the rapport of which is already built you do experience a win-win situation. You can opt going for a food franchise. Of course, you will have to invest for the set-up, food processing equipments, follow space and food menu conditions followed by the parent group, pay royalty, pay part of income generated and more. Compared to other segments, you need not invest big in a food franchise. You will have to consider the location. The better the location, the more lucrative will be your food franchise chosen.

When we speak of food in India, we cannot think of a counted few items. There are countless food items specific to each region; most of you must have not yet explored the regional food in the towns and villages of each state. Start exploring, especially if you are a travel freak and love exploring cultures. You will be surprised at the countless delicacies with each dish tasting different. Well, food in India commonly offered in the restaurants is same in the menu no matter which part of the country you visit. It can be South Indian food or North Indian food. And again food in India is not only limited to meals; there are sweets, snacks, chaat, namkeen, vegetable snacks, and more.

Those who have tasted South Indian food never let the taste disappear from their palate. Whether it is breakfast or lunch or dinner or supper, they would love to have any of the South Indian food items to appease their appetite. Right from plain dosa, masala dosa, onion rawa masala, rawa plain dosa, rawa masala dosa to plain uttapam, vada sambhar, mixed uttapam, sambhar idli, etc. you have a myriad range of options in the menu to choose from! It is not only in South India but across the country that you will find South Indian food in the restaurants.

How crucial is it to have the confidential operations manual in a franchise company? Indeed, it usually astonished me how many franchise businesses would start off out devoid of at any time obtaining written their confidential operations manual. They may possibly have had 20 years experience in a tiny business design, identical to the one particular they desire to franchise, however they had by no means published to manual.

I suggest “E-Myth” By Gerber and possibly this will handle some of what I am hoping to say. The consistency and integrity of a franchise system and its brand-name rely on a duplicatable approach of carrying out business. The confidential operations manual and it’s specifications should be followed routinely by each and every franchise outlet. In simple fact, this matter is so essential that I have copied the clause in my franchise company’s franchise arrangement, which addresses this concern/p>

3.7 Confidential Operations Manual And Specs

For First And On-Going Gear, Stock And Materials Our market is very competitive. Constant efforts to preserve, update and increase the System are crucial. The developments Franchisor will make for the benefit of the Technique as a whole are contemplated all through the term of this Agreement. The steady improvement of the Method in this manner is an critical and beneficial facet of the partnership Franchisee needs to have with Franchisor. Franchisor agrees to supply Franchisee with one particular password to accessibility the loaned copy of The Auto Wash Guys Confidential Operations Manual the moment Franchisee has paid to Franchisor the Preliminary Payment, in full. The Confidential Operations Manual consists of the System, which includes specifications, criteria, running procedures, accounting and bookkeeping methods, advertising and marketing ideas, inventory demands and control techniques, wash unit options and specs, gear and indication demands, public relations and other guidelines thatFranchisor may prescribe from time to time. The Confidential Operations Manual is and will stay confidential and Franchisor’s unique home. Franchisee will not disclose, duplicate or duplicate any portion of the Confidential Operations Manual for any explanation.

Franchisor develops minimum specifications for wash items, chemical compounds, merchandise, inventory, supplies, stationary, company forms, marketing, decor, wash unit plans and specs, resources, devices and indications, between other factors. These requirements are outlined in the Confidential Operations Manual. Franchisee will obtain all wash goods and stock products specified in the Confidential Operations Manual. Franchisor may amend the Confidential Operations Manual, such as changes, which could affect minimum needs for the franchise operations. Franchisee will strictly adhere to the requirements of the Confidential Operations Manual as Franchisor amends it from time to time. Franchisee will apply immediately all changes at Franchisee’s cost, except if Franchisor in any other case specifies. Franchisor fairly may limit Franchisee from generating, stocking, and offering particular items and merchandise, from time to time, as specified in the Confidential Operations Manual.

Franchisee may acquire some wash gear, stock, and supply items from Franchisor, if provided, at Franchisor’s then current prices. If Franchisee wishes to purchase any items from Franchisor, payment arrangements must be produced when Franchisee places their order. The products Franchisor might give consist of between other things equipment, merchandise and supplies that bear the Service Marks. Franchisee need to acquire all wash merchandise, materials, chemicals and inventory items from Franchisor, if offered, or suppliers Franchisor approves from time to time.

Franchisor will not be liable to Franchisee if Franchisor is unable to supply devices, stock, chemical substances or supply objects to Franchisee since of anyloss, damage, or delay triggered by strikes, riots, fire, insurrection, war, factors, embargoes, countrywide or neighborhood vacations, failure of carriers, inability to obtain transportation amenities, forces majeuer, functions of God or of the public enemy, or any other result in outside of Franchisor’s manage.

Franchisee need to obtain all devices, chemical substances, items, supplies and components needed for the operation of the Franchise from producers, vendors, suppliers or distributors approved by Franchisor. All specs that Franchisor requires of Franchisee and lists of accepted vendors and suppliers will be integrated in the Confidential Operations Manual and the Franchisee Forum intranet technique. Franchisor will use their greatest judgment to set and modify specifications in order to keep the integrity and quality of the franchise program.

Extra car wash trucks/models and connected products must be acquired by way of Franchisor, if supplied, or from a listing ofaccepted vendors. Franchisee understands that the costs of these products purchased from Franchisor might be raised or reduced by Franchisor from time to time because of to raises or decreases in costs by Franchisor’s vendors. Franchisee even more understands that objects Franchisee buys from vendors may possibly also alter in cost.

Upon advance published request, Franchisee might request Franchisor approval to get gear, chemicals, merchandise, supplies or components from sources that Franchisor has not formerly approved.

Franchisor requests that Franchisee look for out manufacturers, vendors, suppliers and distributors in their Marketing and advertising Location to continuously grow the authorized vendors and products available to franchisees systemwide. Franchisor moreover requests that Franchisee look for out new providers, ideas, technologies, supplies and approaches from their Advertising and marketing Area that can be introduced to constantly update, improve and broaden the Technique and keep all franchisees technique wide on the top edge.

Franchisor may possibly demand Franchisee to give Franchisor ample information, pictures, MSDS sheets, drawings, samples, and other info to let Franchisor to decide whether or not the objects from these other sources meet Franchisor specifications and criteria, as established from time to time. These specifications and criteria will relate to high quality, texture, composition, absorbency, strength, finish and visual appeal, and the suppliers’ capacity and facility to provide Franchisee’s requirements in the quantities, at the periods, and with the reliability required for effective operation. Franchisor may possibly call for that samples from any supplier be delivered to a designated impartial testing laboratory for testing prior to approval and use. Franchisee will reimburse Franchisor for the real cost of the checks. Franchisor will license any supplier, that can meet or exceed Franchisor quality management and confidential formula demands and standards, for a affordable license payment, to create and supply products to Franchisee but to no other man or woman.

Franchisor confidential production demands, gear, designs, techniques and formulas will be disclosed to possible suppliers only soon after Franchisor has acquired affordable proof that the proposed supplier is reliable and reliable has the capability to routinely adhere to Franchisor criteria, demands and testing methods will keep the confidentiality of the styles, systems and formulas and will adequately supply Franchisee’s affordable desires. Franchisor will not unreasonably withhold approval of a supplier Franchisee proposes. Franchisor will notify Franchisee in writing of the approval or disapproval of any supplier Franchisee proposes.

From time to time Franchisor or their agents may possibly inspect any accepted manufacturer’s, supplier’s or distributor’s facilities and goods to assure proper production, processing, packaging, storing, and transportation. Permission for inspection will be a issue of Franchisor’s continued approval of any producer, supplier or distributor. Really should Franchisor decide from any inspection that a manufacturer, supplier or distributor fails to meet Franchisor’s specifications and standards, Franchisor will give published observe describing this failure to Franchisee and to the manufacturer, supplier or distributor, jointly with a discover that unless of course the failure or deficiency is corrected inside thirty (thirty) days, the producer, supplier or distributor will no more time be authorized.

All initial transactions with vendors need to be negotiated by Franchisee prior to the opening of the Franchised Company. Franchisee ought to buy the essential objects by means of Franchisor’s approved vendors and resources, have taken receipt of, installed in Franchisee’s mobile vehicle wash truck/unit and have completely operational all needed things inside one hundred thirty-5 (135) calendar days of signing the Franchise Agreement.
Franchisee will discover all specifications for the original gear in the Confidential Operations Manual and the Franchisee Forum intranet system. If Franchisee does not have all required gear prepared inside of one particular hundred thirty-five (135) calendar days because of to situations past Franchisee’s management, Franchisee agrees to borrow a loaner unit to commence the Franchised Enterprise if one particular is obtainable and Franchisor delivers it to Franchisee.

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Even though our tiny franchising business was really simplistic you can see how essential this problem was to us. Every franchising company requirements to get with legal counsel and a qualified franchise attorney to strategize how finest to handle this problem in the franchising arrangement. So, contemplate this in 2006.
I.M. Confidential Bonus

Franchising Business Commercial Franchise Lawyers – We have all heard of the term, and most of us know people involved in it. After all, it now contributes more than 10 billion to the UK economy, across numerous business sectors. But what is it really all about, and how are some businesses so successful at it, whilst for others it brings disaster?
The concept is fairly simple. In a franchise, an established business (the franchisor) grants someone (the franchisee) the right to trade under the franchisors trade mark or trade name.
Most franchising is actually business format franchising. This means that the franchisor develops a business concept, including a trade name and operating methods, and they train the franchisee in how to run their business using this concept. The franchisee operates his/her own business under the franchisors name and under some fairly tight controls and guidance. These are set out in a franchise agreement, and usually an operations manual as well.
At heart, a franchise agreement is essentially a trade mark licence, with a number of operational instructions and controls placed on the franchisee.
In many cases, the franchisee is given an exclusive territory in which to operate during the term of the franchise agreement.
For franchisors, franchising can therefore be an exceptionally quick route to business growth, with low overheads and low risk. We will look at this in more detail later on in this article. For franchisees, franchising can provide an attractive opportunity to own and operate their own business, but one which has a proven business concept and which provides training and support. Franchising can in some cases also provide a very rare opportunity for genuine work/life balance.
Sadly however, as with everything in life, it is not always that simple. Although survival rates for franchisee businesses are much higher than for other business start-ups, franchisees all too often fail. Some lose substantial amounts of money, often through no fault of their own. Below are some of the perils to avoid:
Peril No. 1 – Not doing enough homework before handing over your cash
Most franchisors can talk a good talk. It is their job to convince you that their franchise offering will bring you wealth and success. However, whilst many franchisors are scrupulously honest and professional in their dealings with prospective franchisees, some of them are unfortunately not.
Remember when you take on a franchise this is a business to business agreement. There is no consumer law to protect you, so your legal remedies may be very limited. It is your responsibility to check out what you are being told, and never to take promises and forecasts on face value.
It pays to remember the age-old saying: If it sounds too good to be true, it probably is!
Membership of the British Franchise Association – requiring the signing of a charter for ethical franchising – is a good indicator of an opportunity worthy of consideration, although there is no substitute for properly checking out and researching a franchise.
Peril No. 2 Taking on a franchise which does not play to your personal strengths
You need to think long and hard about whether taking on a franchise will suit your personality and skills. You may imagine, for example, during a frustrating day at the office, that nothing would be lovelier than leaving the rat-race and running your own cafe. But beware of the grass is greener over the fence philosophy. No matter what franchise you take on, it is likely to involve hard work, and this will never be satisfying unless it is something that you are passionate about.