Franchising is a kind of a business by which the owner (franchisor) of a product, service, or method obtains distribution through affiliated dealers (franchisees). A franchisor is expected to offer assistance in organizing, training, merchandising, marketing, and providing direction in substitution for a consideration. DOES FRANCHISING IMPLY YOU ARE SELF-EMPLOYED? In some respects, NO. You’ve still got to answer to someone else and follow his / her direction.

You don’t really own the business; you own the assets you’ve purchased in order to establish the business. If you consider that you are in business for yourself, however, not by yourself, then YES…you are self-employed. Globally, franchising is typically the most popular and the quickest growing business-economic model.

It assembles business relationships that allow visitors to share brand recognition, a successful method of doing business and an effective marketing and distribution system. When most people think of a franchise, they think fast food. Franchising, however, ago grew beyond the burger and fried-chicken shops long. Today franchise concepts span over 70 different product, and service sectors, including such businesses as auto-repair shops, children’s art centers, fitness clubs, law & consulting practices, and many home-based businesses. The franchising business model has turned into a major economic engine globally and it is one that’s providing increasing opportunities for companies and individual entrepreneurs as well.

For South Africa, as well as for Africa as whole, franchising is a perfect vehicle for the financial empowerment of the historically disadvantaged areas of the populace. This brings with it the necessity for the establishment of more franchises. That is, franchising businesses that are founded, which has a unique offering and where in fact the method of doing business has been attempted, perfected, and tested. 1. An investment is usually made into a successful business.

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2. A faster start up, creating a customer base quicker, and experiencing success quicker are fundamental attractions. 3. There’s a known quantifiable proven formula. 4. Owner changeover and training are available, and there is certainly full control of strategic direction and capability to completely review past information and company history. 5. The biggest benefit of franchising appears to be the reduction of the risk you will be taking for your investment. 6. You also usually progress deals on items because the franchise company can purchase goods and items in mass for the whole chain and then pass that savings to you and the other franchise systems. 1. Some franchises can be quite expensive.

Franchisors expect you to follow their procedures manuals to the letter. No flexibility on your part. 2. Investing in a franchise is like marrying someone you haven’t known for long. 3. The relative security provided by franchisors might be exaggerated. Some franchisors are in for an instant buck. 4. Franchising as a pyramid scheme. Some companies try to make money by collecting franchise fees just, and won’t spend enough time or money necessary to help their existing franchisees succeed.

5. Overcharging for items. Some franchisers may require you to buy supplies from them at inflated prices exclusively. 6. Fees for unnecessary training. 7. Misleading sales presentations. BUSINESS OWNERS: IS YOUR BUSINESS FRANCHISE READY? An appropriate first step in your choice to franchise is an examination of the question of whether or not a business idea is in fact “franchisable.” Any business significantly considering franchising should undertake this analysis before applying a franchise strategy.

1. Credibility: To sell franchises, a company must first be credible in the eyes of its prospective franchisees. Large organization size, variety of outlets, years functioning, strength of management are key credibility factors. 2. Differentiation: Furthermore to credibility, a franchise organization must be adequately differentiated from its franchised competitors. This may come in the form of a differentiated service or product, a reduced investment cost, a unique marketing strategy, or different target markets.

3. Transferability of knowledge: Another criterion is the capability to teach something to others. To franchise, a business must generally have the ability to thoroughly teach a potential franchisee in a relatively short period of time. 4. Adaptability: Next, measure how well a thought can be adapted from one market to the next.

Some concepts do not adjust more than large geographic areas because of regional variations in consumer tastes or preferences. 5. Refined and successful prototype operations: A processed prototype is essential to show that the machine is proven and is instrumental in working out of franchisees generally. The prototype acts as a testing ground for services also, new services, marketing techniques, merchandising, and operational efficiencies. 6. Documented systems: All successful businesses have systems. But in order to be franchisable, these functional systems must be recorded in a fashion that communicating them effectively to franchisees.

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