To begin afresh franchise is a challenging job. The seed of an idea is its inception followed by a plan of marketing, branding, sales, hiring, etc. The product strategy is followed by raising the capital to put the whole scheme into execution. In the business system, the rights of business, logo, model of an established name of the company become an extension of the existing company. The model of functioning is like the parent company.
The contractual relationship between the owner and the seller generates business. The procedure for setting up a franchise business;
The beginning fee for purchasing rights for the business, mechanism, etc that the franchisee needs to pay.
Once the rights are purchased for the validated business system the access to trademarks, slogans, brand name logos, etc.
The franchisee is allotted specific areas of business operations such as selling and other services.
The time for the contract will be applicable based on the agreement.
The option of renewing tenure is also possible.
The royalty payment is paid mostly on annual basis or as per agreement.
The royalty amount is computed based on total sales executed by the retail outlet.
The advantage of possessing a franchise business:
Hazard - The best advantage of investing in an established business is that it is time tested. Profits and growth are likely to be favourable.
Coaching - The training and technology know-how along with methodologies are tested in business and are likely to stay stable.
Planning - Many marketing techniques are needed for running the business. This will help in the growth of business at a satisfactory rate.
Backing - The franchisor extends all support to the franchisee. The significance of a central location is calculated by way of profits which would be shared by the franchisee and franchisor.
Network and links - The difficulties encountered by other franchises will give a better vision of the business plan and the strategy adopted.
The disadvantage of possessing a franchise business:
Beginning fees - A fee is a must because it covers license cost. The structure of the fee may differ from brand to brand. The amount is most sumptuous. It varies from a few lakhs to a crore.
Deposit of continuing royalties - This is calculated on basis of total sales from that outlet. This could be monthly or annual. The percentage may vary from 5% to -12% on monthly basis.
The rules need to be adhered - The rules and regulations need to be followed and are decided beforehand.
Funds for marketing - Marketing procedures come at a cost. Marketing funds also cost money. Out of the total cost the franchise may need to pay 1-2% of the sales.
Selling of franchisee - If the decision is taken to sell the franchise the purchaser must be endorsed by the franchisor. The buyer must be selected with care.
Business opportunities are less methodized compared to franchises. A business opportunity is any package of goods or services that makes it possible for the purchaser to start a business in which the seller represents that it will extend a marketing or sales plan. It shows a market prevails for the product or services and an attempt can lead to profit.
Important points
A business opportunity does not mostly promote the seller's trademark. The buyer functions with his or her name.
Business opportunities are less expensive compared to franchises as ongoing royalty fees are not charged.
Business opportunities permit the buyer to go ahead with no boundaries as to geographical market and operations.
Generally, business opportunities enterprise has no ongoing supportive relationship among sellers and the buyers once the beginning package is sold. Thus, the buyer is after that on its own.
