If you are interested in investing in a franchise, make sure you know the basics. Here is a quick guide on the important aspects of franchising that all prospective franchisees need to know.
How It Works?
Franchising can be described as working for yourself but not by yourself. By investing in a franchise you gain the advantages that supported self-employment provides.
The franchisor gives a license to the franchisee to operate the business with the same brand name, in exchange of an initial franchise fee and ongoing fee. The license is given for a particular time and that duration is mentioned in the franchise agreement. The franchisee also gets the franchisor’s expertise, power of the brand and proven business method.
A franchisee has to operate the business as it is mentioned in the franchise operations manual, provided by the franchisor. Most franchises are defined by territories which indicate your trading area.
The Role Of The Franchisee
An important aspect of being a franchisee is being able to follow a system. The businesses model and processes are all tried, tested and proven to deliver business. The role of the franchisee is to follow these processes to replicate the business and make a profit for themselves.
As mentioned, the franchisee will be the key player behind the franchise. You will get huge support from the franchisor, but you need to have the passion and the drive to make franchise a success. Your franchisor won’t be there to support you every single day. It will be your responsibility to focus on the business and use the tools given to you to become a successful franchisee.
A major advantage of becoming a franchisee is that you will get an established brand name with client base. You will work together with a network of people towards a same goal. You and other franchise owners will be able to share information and support each other as well as have the back from the franchisor.
The Franchisor’s Role
The franchisor is the company or person that owns the brand name. They will provide all of the following in exchange for the initial franchise fee and the ongoing fee.
- Training: Both before you start trading the franchisee and ongoing trading as required
- The tested and proven business model for the franchisee to work from
- The backing of their existing brand
- The operating systems and business processes
- Support with advertising and marketing so franchisees can get customers
- Ongoing support as required by the franchisees.
The franchisor is the head of the business and will give the franchisee with all everything that they need to get going. However, don’t assume that they will run the business for you. As a franchisee, it will be your responsibility to make the franchise work.
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