Why the Hype about Franchising?
In this day age of doing business, there a lot of dots to connect. Franchising is often referred to as "turn-key" or "business in a box". Although no business is completely turn key or as simple as opening a box, franchising does put most of the pieces together for you and usually provides you with the support and tools to open your business and to keep it operating. Why do people want to get into franchising?
With franchising, there is a "franchisor" who acts like the parent and the "franchisee" who could be considered the child. The franchisor teaches, trains and then lends support to the franchisee as they go through the process of opening their business and becoming independent. With franchising a franchisee is never completely independent though, as the franchisor sets forth the rules and procedures for operating the business. To some this may seem controlling, but in the world of franchising it is about consistency, quality control and maintaining the brand image and association.
Just look at the hamburger business. There are several major hamburger franchises out there and as a consumer it doesn't matter if you buy a burger in New Orleans or Salt Lake City, the burger will be the same. Even if the franchise doesn't offer the best hamburger in the world if it is good enough to get a customer back and the customer knows what to expect, then chances are they will come back because there won't be any surprises.
To build the franchise brand franchisors teach their franchisees how to operate similarly. The franchisor works hard to develop the best products and services to pass on to their franchisees. It is the franchisor, not the franchisee, who has the "test kitchen" and spends the time, money and effort trying to figure out what works and what doesn't. Thus, when you are part of a franchise system, you get to rely on someone else to do the leg work for keeping us with the latest and greatest business techniques. However, if a franchisee has an idea of how to improve the system most franchisor are welcoming to such ideas and then try to pass them on to the other franchisees.
In a franchise system, there are usually various departments of different focus to help the franchisee succeed. It is not uncommon for there to be training department, operations department, marketing and design department, IT department, and a business development department. Franchisors want their franchisees to be successful. If the franchisee is successful, then the franchisor is successful.
Why? Well, beyond an initial franchisee fee to join the system most franchisors charge a "royalty" on the franchisees' gross receipts. The more the franchisee makes, the more royalties that the franchisor receives. Is this fair... Well, there are definitely benefits to be a part of the "club" and to be able to use the franchisor's brand. Additionally, if you were to add up the cost to develop all of the material, processes and system, and then the cost of the ongoing support and training, I think most franchisees would say that the royalties are justifiable.
In closing, franchising is more than just hype. Franchising is about joining an established and proven business model that saves a franchisee years of start up time and thousands of dollars in development. There are many sites like http://www.getintofranchising.com where you can research about franchises for sale. More and more business owners are turning to franchising as they realize the many benefits of franchising. Today, there are franchises from A- Z to help people get started in a variety of different industries and fields.
With franchising, there is a "franchisor" who acts like the parent and the "franchisee" who could be considered the child. The franchisor teaches, trains and then lends support to the franchisee as they go through the process of opening their business and becoming independent. With franchising a franchisee is never completely independent though, as the franchisor sets forth the rules and procedures for operating the business. To some this may seem controlling, but in the world of franchising it is about consistency, quality control and maintaining the brand image and association.
Just look at the hamburger business. There are several major hamburger franchises out there and as a consumer it doesn't matter if you buy a burger in New Orleans or Salt Lake City, the burger will be the same. Even if the franchise doesn't offer the best hamburger in the world if it is good enough to get a customer back and the customer knows what to expect, then chances are they will come back because there won't be any surprises.
To build the franchise brand franchisors teach their franchisees how to operate similarly. The franchisor works hard to develop the best products and services to pass on to their franchisees. It is the franchisor, not the franchisee, who has the "test kitchen" and spends the time, money and effort trying to figure out what works and what doesn't. Thus, when you are part of a franchise system, you get to rely on someone else to do the leg work for keeping us with the latest and greatest business techniques. However, if a franchisee has an idea of how to improve the system most franchisor are welcoming to such ideas and then try to pass them on to the other franchisees.
In a franchise system, there are usually various departments of different focus to help the franchisee succeed. It is not uncommon for there to be training department, operations department, marketing and design department, IT department, and a business development department. Franchisors want their franchisees to be successful. If the franchisee is successful, then the franchisor is successful.
Why? Well, beyond an initial franchisee fee to join the system most franchisors charge a "royalty" on the franchisees' gross receipts. The more the franchisee makes, the more royalties that the franchisor receives. Is this fair... Well, there are definitely benefits to be a part of the "club" and to be able to use the franchisor's brand. Additionally, if you were to add up the cost to develop all of the material, processes and system, and then the cost of the ongoing support and training, I think most franchisees would say that the royalties are justifiable.
In closing, franchising is more than just hype. Franchising is about joining an established and proven business model that saves a franchisee years of start up time and thousands of dollars in development. There are many sites like http://www.getintofranchising.com where you can research about franchises for sale. More and more business owners are turning to franchising as they realize the many benefits of franchising. Today, there are franchises from A- Z to help people get started in a variety of different industries and fields.
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