When a company entitles an individual to sell that companyâ€™s products and services for a particular amount, it is called franchising. There are various factors that decide the success and failure of a franchise and its franchisee (an individual who owns a franchise). It is not just about taking a brand to the people but also about doing it the right way. Therefore, it is essential to know everything about franchising before taking a plunge into the venture.
Before taking up a franchise, there are certain franchising facts you need to be familiar with. More about Basics of franchising:
HERE ARE THE TOP 4 FACTS YOU MUST KNOW ABOUT FRANCHISING.
What is franchising?
Franchising can be defined as the process of transferring the rights to sell a companyâ€™s products or services to any person and gain a share in profits or charge a particular fee in return. However, this not only requires a willing individual, but also a place to set up a franchise, and initial investment regarding the location, buying products and services and other expenses.
Taking up a franchise might prove to be simpler than starting a business from the scratch. As the product being sold at the franchise will have a market, an established brand and already existing customers to begin with. Starting a business brings in more risks than owning a franchise, as starting problems would be already taken care of by the business owner.
Unlike your own business, a franchise comes with many advantages such as supporting the franchise in its daily functions, accounts, publicity and training.
A few shortcomings of franchising
Franchising is not a quick deal. It is also not as rosy as it seems. It is not just about partnering with a well-known brand and selling its products and services. You need to do a thorough research about the company you are associating with, its people, its goals, and its repute in the market before investing money.
As a franchise holder you donâ€™t have complete freedom to run the franchise the way you want. You have to abide by the rules laid down by the owner. This can sometimes create tiff between you and the business owner or the representative. Therefore, it is always to clear where you stand before signing the contract.
How does the franchisor select the franchisee?
There are certain characters that the franchisor wants in a franchisee.Â Somebody with strong leadership qualities, passion for the business that the company deals in, the required passion to deal with the products and services, the knack to handle customers, someone with good experience and who can contribute to the already successful business.