The franchise has become one of the most important and effective strategies for business development in the past quarter century. Although the development of the franchising system dates back centuries to the days when MONARCHS territories available for tax collectors, the current system of franchising businesses date back decades to the Singer sewing machine from the strategy of granting rights to individual entrepreneurs to sell products in various regions Singer.
Franchising Franchisor a strategy can penetrate, to develop and dominate the markets in a simultaneous basis. A franchise system also allows each franchisee to own their business, and still participate and increase the value of a proven franchise system.
A good franchise system allows the company to franchise to win market share quickly, which operates barrier to competition, and helps to build brand, which in turn creates exponential value of all stakeholders – including each subsidiary.
How to find a good franchise; And it makes sense that if you want to learn strategies, culture, compatibility, and then you should ask the right questions. The answers can then be evaluated to determine if the setting is correct.
The following discussion covers five questions to be asked franchise. If the licensor is either unwilling or unprepared to answer these questions, should be a strong indication that the adjustment cannot be right.
How big is the market?
The franchisor must have a good grip on the market for the product or service will be offered as a licensee. Obviously, the companies did extensive research on current market size and the size of the market potential for the future.
The franchisor must be willing to share this information with you so you can evaluate data to make sure that this opportunity will be large enough to meet its objectives. You may need to sign a non-disclosure agreement first, but that information is important for you and this should be evaluated. The whole idea of franchising is to ensure that the objectives and dreams of franchisees, as well as those of franchisors, is single. If the market availability of strategies will be implemented by you, consistent with your goals, and the penetration of these objectives are in line with the licensor goals, then all is well.
If this is a long and stable market, then there should be full of statistics to back that conclusion. If this is a new and thriving market, there should be analysis that can be acquired in order to provide a comfort level that, together with Franchisor, you may receive a substantial share. If this is a quirk of the market, or limited life market, then the strategies should reflect the fact that, as well as the agreements.
The caution is that if the licensor is wishy-washy on the market, or is willing to discuss the matter in depth with you, that should be an important warning signal.
Who are the competitors?
The franchisor must have a good understanding about competition, as their market share command. It does not matter how big a market it is fully saturated, unless the licensor has specific strategies for someone else to eat lunch.
The franchisor must be able to tell you about specific competitors, what their strategies are, perhaps in the future, and how the franchise intends to penetrate this market.
The franchisor must also be willing to discuss the future competitor that may appear on the horizon. It may not be willing to disclose the specific strategies to address them possible – at least not without clear memory after the debate. However, a general debate on the issue should be given some relief that they have thought about their approach and to feel comfortable with their preparation.
Again, if the licensor is not sufficiently prepared to discuss competition, and competition in the future, then the warning bells should be continued.
The franchise is expandable;
The issue concerns the objective, as we all do. If you want to grow your business a process to leverage the franchise in most places, or using the results of the number of employees, or any other appropriate channel for enterprises and companies to develop if it is one of the your goals and resources and are available in the market system franchise, what is the cost of influence?
Some systems providing services, makes it impossible to recruit workers, while others encourage it. In the case of systems that encourage, you should ask about the cost of adding units this strategy, and the process for all new employees.
The environment in retail trade, the impetus will come from other places, physical or extension or additional production lines, so that applications must refer to this availability and cost of capital necessary to execute the strategy.
Other issues include asking about the geographical restrictions on where companies can build. Again, some companies have geographical limitations, while others allow you to build not refer to the map.
The important thing is to ask the questions, and understand the answers to make sure that future development can be achieved with the evaluation system was.
What are the companies that plans to develop?
You can believe that an increase of Franchisor plans are not important for you as soon as a franchise. However, there are some factors that show that the licensor that has continued to develop plans to increase the value of its investments.
The opposite of growth would be shrinkage. That does not sound very good right? The half point would be stagnation. This is not very attractive. So why growth is important?
An important factor related to the penetration of the above target. If there is no space to penetrate and Franchisor does not have strategies to respond to this market, we would guess would happen. Yes, competitors will penetrate, and by developing strategies, could eat some of your meal. E ‘reasonably better for you that companies have to develop strategies that will address the needs of the market, and increase the value of the franchise, as opposed to rolling the welcome mat for competitors.
A second factor is that a normal phenomenon in Franchising is that each franchise added to the system, and each new customer added to the system, and each new employee added to the system, increase the value of the brand. Volume influence on price negotiations. The messages carried by more lips. More signs, more transactions, more bank deposits, more customers, suppliers – all resulting in increased brand recognition. Increased brand recognition should translate into more business for each franchise.
Moreover, the strategies for the development of general rights franchise lead. This means that if you pay 2 U.S. dollars as royalties franchise, and strategies for the development of the drive The franchise up to $ 5, which then becomes the basis for the franchise, because the market value of pay that price. This is a nice return on investment if it is achieved in a reasonable time, which of course must be guided by the strategies for the development of the Franchisor.
OK, so there are many good reasons that growth is important, in contrast to shrinkage or stagnation. However, you should feel comfortable that the strategy makes sense. That is why it is necessary to ask the questions, and we should expect good answers that make sense for you.
What exit strategies are available?
There are many factors that should enter into your analysis before becoming licensee. The madness is rarely used in considering this part of the equation long time are considering opening a franchise in the first place. This is the moment you have to give substantial consideration the value of assets that can be created. During the profitability, cash flow, and emotional satisfaction, are all important criteria in the process of making a business decision on how to become a licensee. But then so is to increase the value of assets to establish, in conjunction with the ease of achieving this value when planning to leave.
We need to discuss these issues with the Franchisor as you consider the possibilities of franchising. If the licensor is not prepared to discuss these issues, it could mean that a solid basis for the development of activities, and current profitability is the only consideration. We must determine how important this particular part of the equation is for you. The important thing is to be asked to assess the response in terms of goals and dreams.
There are many other issues that should be asked to Franchisor. These five questions will give you a good basis for understanding the general strategies and thoughts of franchisors. In this way you can determine if you have unified thinking, and if the answer is yes, then you can craft more specific questions on the system.
Gen Wright
http://www.articlesbase.com/ask-an-expert-articles/why-starting-a-franchise-in-the-uk-makes-sense-671613.html
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