Franchising - a very common type of business in North America. What are the main differences from the usual franchising business?
When you open regular business entrepreneur will have to decide on their own set of questions:
What will the business?
How profitable and promising business planned?
What size should this business?
What staff need to hire and for what purpose?
Which advertisement required, where and how often to give her what tools will be required and who will deal with?
Where and what to buy equipment and what it will cost?
Development of marketing strategy business?
In what area to open a business?
What tools will have to invest in the business at the opening; which means we must keep in reserve for its development?
Where can I borrow money for business development?
Clear answers to these questions are important to the success of any business. In North America, without competent, professional business solutions they simply can not survive - so strong competition.
Now imagine that someone has already completely passed this way - founded the firm and decided all questions, in many cases with the assistance of professional marketers, financiers and other business consultants. Not only agreed but also proved in practice the right technology long-term success of business. The owner of this business offers to help any entrepreneur in the opening exactly the same business, one might even say, the branch.
The new business will operate on exactly the same technology as that of the selling company, and provide the same services or to produce exactly the same product. Sold by the buyer will teach all the details of doing this business. He will receive advice on the scope of business in the selected region, assistance in selecting the location, take away premises, staff recruitment, purchasing equipment. He will know the level of expected profits and investments at different stages. Entrepreneur to provide a detailed plan developed and proven organization and business. Business, open to such a scheme, called franchising.
The owner of franchising also gets the right to name the firm name of the firm-seller. Name recognition is of paramount importance for the success of business in North America. 99.9% of buyers will go to franchising "McDonalds", just because everyone knows the name, rather than in the wonderful, but unknown to the snack bar or restaurant. At the same time, each franchising, although bears the name of the company, the seller, works independently and is solely responsible for its financial activities.
By buying franchising buyer usually pays from its funds part of its total value (from 30% to 70%). The remaining payment of the amount available in the debt (funded) by the bank itself or selling the franchising company. This amount will be refunded the buyer financed with interest certain parts within the stipulated in the agreement on the financing period.
If the firm-seller itself does not provide funding, it usually sends the buyer to cooperate with it in the bank, which makes it easier to obtain financing.
sold by the buyer provides franchising typically 10, 15 or 20 years. At the same time, the terms of the contract allows the owner to sell it frrenchayzinga at any convenient time. Accordingly, it is possible to buy an already active franchising, which may give certain advantages compared with the formation of a new business. The cost of franchising can range from $ 10,000 to $ 1,000,000 and above.
It is clear that, in contrast to a fully-fledged business where the entrepreneur is left to himself, the owner of franchising has strong support in the face of firm-seller. In many cases, the firm has extensive experience in this business, has a special staff for maintenance and consulting owners franchising, franchising holds interests in national advertising campaigns, research and development in order to maintain their competitiveness.
According to the US Department of Commerce number of franchising, ceases there is less than 5% annually. At the same time, the number of independent businesses, disappearing from the market during the first three - four years after their appearance, is about 75%.
Of course, for these benefits have to pay. The owner of franchising makes monthly payments to the company, the seller (the so-called Royalties), which can range from 2% to 10% of total sales or profit. He agrees to comply with technologies available to buy raw materials only from certain suppliers and comply with other conditions stipulated in the contract for the provision of franchising.
Does this mean that the owner of franchising is 100% immune from failure? The answer is: absolutely not. Franchising - it is a business and like any business, it retains a certain amount of risk.
Many Canadian firms selling business franchising system. In the Canadian market as there are numerous franchising American firms. Those American companies, franchising are not yet operating in Canada, as a rule, will be happy to start with your help, its presence in the Canadian market. When deciding on the purchase of franchising, be careful and follow the rules of buying business.
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