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Benefits Of Franchising

So you have money and want to invest it somewhere? You have shopped around and looked into all the options available out there. You are looking into franchising and need to decide if it's good for you. Franchising is a great idea. Imagine if you were to invent a product.

You do the research, spend money developing it and test your product in various markets until its perfect. Suddenly you realize it's a success and you now have a product that it's profitable. This could have taken years to develop and cost you a little fortune. You did all the work, the trials and errors until you made it perfect. If you teach a friend how to reproduce your idea, that friend has saved himself the hassles of:

• Creating the idea
• Research
• Development
• Testing
• Marketing
• Spending the your own money to create this proven product
• Risk and failure.

Now, that's just the beginning. Franchise companies offer a lot more than just their knowhow. They want you to succeed as they will take a small portion of your profit in exchange for sharing their product and secrets of their success. Today more than ever, franchising has become the way to go for companies with great ideas that want to grow. From restaurants to wineries to portable toilets, any business can practically be franchised. For investors like you that want to become self employed it's a great way of start a business. They have already done the work for you. The following are common areas of expertise that they provide and assist you in the becoming a successful franchisee:

1. Ongoing Know how and Expertise One of the great benefits of franchising is that they will continue to provide support and assistance to ensure your profitability and success. Remember they want you to succeed. This includes new products, training and support.

2. Proven Business Model. The business model should have already worked and proven to be a success and profitable minimizing risk. Even start up franchises may have a business model that has worked and now they are ready to expand their business via franchising it, however, remember you are never guaranteed your business will succeed.

3. Direction Franchisors will provide advice, consultation and evaluations to ensure you are on the right track, operating efficiently and using the right tactics and tools to make your business profitable.

4. Sales & Marketing The majority of franchises advertise for the company as a whole. Promotions, sales, and marketing is usually done by the corporate office or franchisor. This does not mean they will necessarily advertise independently just for your location. Many times you are directly responsible for advertising in your own market or territory. Agreements vary so read your agreement carefully. In addition, many franchisors charge a percentage of your sales, as much as 1%, for marketing and advertising.

5. Location Research and Selection Most franchisors will assist you and provide guidance in all aspects of the real estate portion of the business. They will assist you in finding the right location for your franchise. If construction is necessary they will provide you all the assistance needed to develop the right building for you, which includes architectural planning, design, layout, set up, etc.

6. Purchase Power Just as the name says it, one of the benefits of franchising is the discounts you get buy purchasing anything from supplies to raw materials at a discounted price. Franchisors negotiate with vendors and suppliers for greater discounts if all their franchisees purchase from them exclusively, therefore, enabling discounts for participating in group purchasing.

7. Training Whether you have experience or not, the franchisor will provide you with all the training that is essential in starting, launching, running and operating the business successfully. This not only includes training the owners but also the management and the staff.

8. Operations Support Most franchisors assign personnel and teams to provide all levels of support for the day to day operations. You can expect assistance from advertising campaigns, customer service, accounting, bookkeeping, proprietary software, etc.

9. Brand Recognition: You have the right and are required to use their names, logos, marks and style from the parent company. Customers cannot distinguish between a corporate owned company and a franchised location. You are more likely to get customers because you are a well established recognized brand than if you started your own business from scratch with a brand new business name that nobody recognizes. Immediate public acceptance is one of the huge benefits of franchising.

10. Exclusive Territory Most franchises allocate franchise territories. This allows the franchisee to effectively penetrate and market their territory for maximum sales and profit. Territories have to be sufficiently large in order to achieve the desired goals. Territories also tend to be the principal reason for conflict between franchisors and franchisees. You want to be protected from competition from your own company or fellow franchisees. To avoid conflict, ensure that the territories are clearly defined in your franchise agreement.

When franchising you should inquire on the following: a) Where is the nearest franchise located? b) How do you determine the territory? c) Is the territory exclusive to you or is it shared? d) Are there any rules that determine when a territory has to be shared due to growth or sales increases? e) If a territory is going to be redefined, split or shared, do you have the first right of refusal over third parties? f) What are the exact boundaries? g) How was your territory determined? h) What are the demographics for your territory? i) Is the territory large enough to allow for profitability?

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