How the franchise works in examples. What is the difference between a franchise and a franchise? What is the difference between a franchise and daughters

Many modern businessmen decide to start their business not from scratch, but using the useful developments of other well-known companies. This process has become widely known in the developed countries of the world. At the same time, companies using other people's trademarks, know-how, business models, and their main owners also benefit. Nevertheless, many entrepreneurs in this situation have a completely logical question: what is the difference between a franchise and a franchise? This will be discussed below.

What is a Franchise?

Translated from French, the term "franchise" can be interpreted as "benefit". In reality, this concept means a set of documents that allow a small, most often a starting company to use certain elements of a successful business supervised by a large promoted company, namely:

brands, logos and trademarks;
software development;
management, technological and commercial processes, etc.

A franchise can be thought of as renting a useful development or reputation. This way of doing business allows novice businessmen to quickly achieve success in the market through the use of brands and know-how of major players in the economy. It is quite obvious that such an event costs a young firm a certain amount.

The franchise price consists of two main elements, including:

Lump-sum value - a one-time payment that a novice entrepreneur provides to the owner or software to obtain permission to use it;
Royalty is a part of the profit received from the use of a franchise, which can be in the form of a fixed payment or a percentage.

The use of a franchise requires compliance with certain conditions by its recipient, in particular:

Produce goods or provide services in strict accordance with those quality standards that are approved at the level of the main company;
Affix the product with the trademark of the owner company;
Allow the franchise seller to carry out regular checks regarding the use of the know-how or trademark;
Do not transfer the right to use the franchise to third parties.

Thus, a franchise has a direct and legal right to use other people's developments in business to achieve success in the market.

Franchising content and its main advantages

If a franchise is the right to use useful developments, then franchising is the process of buying this right and forming an agreement between the parties.

The subjects of franchising are two parties, without which it is impossible:

The franchisor - the seller of the franchise - is a large company that has a well-known trademark, good reputation or other useful intangible assets that can be useful in promoting the market;
The franchisee - the buyer of the franchise - is a small young company that wants to get the right to use useful developments in its activities for a certain period of time.

The object of the agreement between the franchisor and the franchisee is the franchise. The parties enter into an agreement for a specified period and the buyer pays the seller.

It is advisable to pay attention to the benefits that franchising provides to a start-up business:

Ensuring awareness. The buyer of a franchise enters the market under a brand already known to buyers, which allows him to avoid huge marketing costs;
Reducing risks. Typically, sellers of a franchise not only sell the right to use it, but also support start-up franchisees, since the latter, in fact, become part of their network.
Useful experience. A new entrepreneur can start a business in a certain industry with franchising, and a little later - after gaining useful experience, start acting on the market independently.

Of course, the cost of a franchise is quite high, and its use is fraught with the implementation of activities within narrow, predetermined limits. Nevertheless, this guarantees the business stability, the possibility of making a profit already at the first stages of activity, as well as some protection from risks.

Thus, the main difference between the two interrelated concepts is that a franchise is a right, in franchising it is a process of its legal use. The franchising mechanism is an effective platform for starting a start-up business, which is based on the achievements of large companies.

Many people are constantly confused about terms.

For example, half of the population of Russia does not know the difference, what is the difference between a franchise and a franchise.

Moreover, they may not even suspect who it is. H

in order to correct this lack of knowledge, we will draw full marks of distinction between these terms.

What is the difference between a franchise and a franchise?

What is franchisor and franchising? First of all, let us define the term "Franchise". They call her conclusion of an agreement between a company / brand and entrepreneur with the aim of further mutually beneficial cooperation... The investor gets the right to use the promoted brand in his own region and receives a profit for this.

The company, in turn, expands its network and also receives interest from this through lump-sum fees or royalties (this is the name of a regular fee for the opportunity to use a trademark. The amount is determined by the franchisor. Many companies have no royalties at all.).

What then is franchising?

Inexperienced business people often don't see the difference, and they equate this concept with a franchise. But this is fundamentally wrong.

Franchising is the very process of acquiring a franchise, as well as the moment of concluding an agreement between both parties. McDonald's, SubWay or Ford are some of the successful examples of this phenomenon.

Finally, who is a franchisor? This is a company that sells certain services or products.

To be called such a definition, the brand management needs to offer cooperation to businessmen and investors.

What is it? The entrepreneur enters into an agreement with the company for the opportunity to use its trademark on the proposed terms.

He opens a point in his city, decorated in a corporate style. The company undertakes to help in every possible way. The investor will then be called the franchisee.

Basically, there are four concurrent words that confuse aspiring entrepreneurs: franchise, franchise, franchisee and franchisor... In fact, it's not that hard to tell the difference between the two.

You just need to define the main concept, and this is franchising (one of the options for entrepreneurial activity that takes place under the tutelage of a large brand or a major partner). From here comes the franchise - the object of the agreement, the franchisor - the company transferring the right to use its name, and, of course, the franchisee - the one who acquires such a right.

Franchising VS. franchise

It is wrong to talk about the difference, because it is worth noting that it, as such, does not exist. Let's look at everything from the other side: these are interrelated concepts. After all, one is what you are going to buy, and the second is the buying process, in fact, a deal.

Franchising is a form of agreement between two parties for the right to use the name of a well-known brand for their commercial purposes. Such an agreement is mutually beneficial for both parties.

For the brand, these are:

Expansion of the sales network for services / products;
constant involvement of interested partners;
strengthening of market positions;
additional profit from a one-time lump-sum payment, as well as monthly deductions (royalties);
minimal interference with work.

For the buyer, these are:

Obtaining a proven, well-developed and debugged business model;
free education;
regular consultations;
marketing support;
minimal spending on advertising;
big profit immediately, thanks to the famous name.

The object of the agreement, i.e. franchise, includes not only the right to use a big name or trademark, but also to use the developed business model. The package includes manufacturing technologies for certain products, software, corporate symbols, unique equipment, etc.

In general, a novice entrepreneur pays for a set of developments, which he cannot do without, and which, moreover, minimize all risks. Among the clear advantages of the franchise is also a sense of support, as the brand itself is interested in improving the image. Most companies are ready to provide assistance to subsidiaries at all stages of work and development (advice, trainings, consultations, learning the right solutions, etc.).

When you have the required amount or you can afford to apply for a loan, you simply choose the most interesting and profitable industry for you and apply to sign an agreement. If you meet the requirements of the franchisor, you will definitely be chosen.

Requirements and conditions can be very different, depending on the type of activity of the brand. When considering a contract, you can make adjustments and suggestions in 90% of cases. If you choose a global brand (Starbucks, etc.), only the brand will dictate the terms. You either agree or you don't.

What is Direct Franchising?

This is a scheme for selling a franchise to a private entrepreneur, which involves very close cooperation. This option allows an individual to become an entrepreneur very quickly, if he has the necessary funds.

If a buyer chooses a foreign brand, he may face problems in providing support, since the distance is not very easy to establish a business. At the same time, the franchisor cannot always correctly assess the working conditions in another country.

As practice shows, for such cases, only the largest companies with financial potential are used to study the opportunities and prospects of the local market. The owner can only sell one franchise and control the activities of the new partner.

So, such a scheme will be simple only if you choose a Russian brand, or one that has opened many representative offices in your country / specific region.

Now that you are familiar with the terminology, you can study the supply market, assess your chances and opportunities, and try to realize your strength in a new direction with the help of a franchise.

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Hello! In this article, you will learn:

What is a franchise in simple terms;
How to start a franchise business;
Common types of franchises and how they work;
Pros and cons of franchising.

And much more that is connected with franchising in Russia.

What is a franchise

Aspiring entrepreneurs face difficulties and challenges that can lead to the collapse of an idea. Franchising with a successful company is a good option. This type of business is most in demand in developed countries, where it accounts for 30% of all working establishments in the service and trade sectors.

The term means a special type of business relationship between an entrepreneur and a company that has successfully taken place and has a brand.

In simple words "franchise" Is a long-term lease of a business project on the terms of the trademark owner.

A special agreement provides for a whole range of services that greatly facilitates the start and allows you to use:

Name of the brand and attributes;
General working style;
Proprietary recipes or formulations;
Work and service technologies.

This system of doing business is rapidly developing in the domestic market of goods and services. If it takes more than one year to independently create a project and bring it to a stable result, working on a franchise can give a good profit in six months.

Difference between franchise and franchising

These two terms are actively used when referring to such transactions.

An entrepreneur should understand the difference and operate them correctly:

Franchise denotes what is bought for a long-term lease (rights, recipes, equipment, etc.);
Franchising - the process of acquiring a long-term lease.

The latter is a way of doing business, which involves buying a brand or production technology, training staff and setting up a branch of a well-known brand. The term “franchise package” is often encountered. It brings together documentation, tutorials and materials owned by the company.

How does a franchise work

Before you understand what a franchise is and how it works, you need to familiarize yourself with the basic terms and names.

There are two parties involved in organizing a business project:

Directly the brand owner ( franchisor): sells a license, allowing you to work on its own behalf under certain conditions;
Buyer ( franchisee): uses the acquired potential in the workflow, transferring a portion of the income determined by the agreement to the franchisor.

A franchise is a completely ready-made plan and model for running a business project, so a future entrepreneur will not need to spend time on solving organizational issues. Despite the cost, this option is beneficial for both parties. The new owner receives support and support, and starts working without huge initial capital, leaving about 90% of the profit for himself in the first month.

The brand receives a stable profit in the form of:

Lump-sum contribution, which is paid once after signing the contract. This amount gives the right to open a business project under the brand name. It includes all the costs of launching, designing and equipping a new enterprise (rent, development of marketing and advertising strategies, staff training);
Royalty as a percentage of the total turnover. In most cases, payment is made monthly to the franchisor's account and is approximately 5-10% of the profit received. This is a kind of replacement for rent. In the commodity form of franchising, royalty is the regular purchase of goods for a specified amount.

Royalties are the main source of income for many franchisors who trade or provide services.

One of the payment options is prescribed in the contract:

Percentage of product sales;
A fixed amount that is paid annually (or quarterly);
Trade margin for branded goods sold by the franchisee.

A low percentage of mandatory payments at the level of 10% is an acceptable amount even for a beginner entrepreneur. The popularity of the trademark helps it attract a large number of customers, recoup investments with minimal risk. For the franchisor company, such a transaction is beneficial not only by the return of stable profits without prior capital investments. It allows you to expand and advance in the market, get high income.

There are two main types of systems that are found on the market:

Franchising goods: various types of store chains are created for the sale of industrial products or food. The franchisor himself is often the supplier of these goods;
Franchising services: A network of training centers is developing, which train specialists for new branches, provide equipment and control.

Such types of work were chosen by the well-known companies McDonald's, Lukoil and Zara, the Perekrestok retail chain and the mobile operator Beeline. Economists identify at least 70 interesting areas where the franchise is relevant and in demand.

The first places in this list are occupied by:

Production of popular food and drink products (snacks, chips or beer);
Supermarkets of various types (food, building materials or gardening);
Gyms and health centers, beauty or massage salons;
Public catering (from fast food eateries to solid restaurants);
Pawnshops and organizations providing quick microloans;
Sale of sports nutrition, oxygen cocktails;
Construction and repair services;
Departments of household appliances or decor stores;
Representation of well-known online stores.

The most promising areas are considered to be related to serving the population and providing various services. They show high sales turnover, so the franchisor will receive decent royalties quickly and consistently.

Varieties of franchises

There are several types of franchises that differ in terms of cooperation and interest rates for using the brand:

Free - the most popular option, giving great opportunities to the entrepreneur. It allows you to make innovations and features in project management. This type is characterized by affordable monthly interest, the ability to use a trademark, interesting free workshops and other privileges. It resembles a dealership more than others.
Classic - provides for a standard approach in the form of a lump-sum payment, compliance with all rules for providing services on behalf of the brand, periodic activity reports to the main office. Clear terms and conditions and strict frameworks distinguish overseas franchise companies.
Business for rent - a franchise entrepreneur receives a business project for management for a specified period. During this period, all income is distributed in the agreed proportion.
Gold - This is an option for experienced businessmen, which allows you to purchase from the franchisor the right to be the sole representative of his brand in the region. With the high cost of the lump-sum contribution, the entrepreneur gets broad rights and opportunities to run the project. They even extend to the possibility of selling a franchise to other businessmen.
Silver- the most convenient form of a franchise. The company is completely "turnkey", independently searches for a place for rent, personnel, and solves organizational issues. It is transferred to the franchisee on a monthly basis, and the company is removed from management.
Corporate- the contract stipulates that almost all actions of an entrepreneur who purchased a franchise are regulated and controlled by a well-known company. He plays rather the role of a manager.
Import-substituting view- involves the production of quality products, similar to the brand name, but under its own name. This makes it possible to preserve technology and originality, working with ready-made recipes or instructions.

The latter has recently appeared on the domestic market, but is actively promoted by foreign companies producing food, cosmetics and detergents.

Franchise cost

When choosing a franchise for many entrepreneurs, the main issue is cost. It directly depends on the popularity and popularity of the trademark, the company's position in the market for goods and services.

An important component is the list of services and equipment that will be available after the first installment. The average franchise size ranges from $ 1,000 to $ 100,000.

The most loyal conditions for a lump-sum payment are offered by supermarket chains, chains of small eateries or cafeterias. Given the economic hardships for small and medium-sized businesses, many have canceled the down payment. This attracts potential franchisees on favorable terms.

The second important issue is regular royalty payments. Almost always, they are prescribed in the contract not in a fixed amount, but as a percentage of turnover or profit. Most fast food chains, grocery supermarkets are limited to 2–5%. Narrow-focused companies or well-known brands may charge 10-12% to work under their own name.

Some entrepreneurs do not have the financial ability to buy a franchise package, but they have organizational skills and a desire to develop their own business.

In this case, the way out will be a franchise without investment, which can be obtained in one of the difficult ways:

Find a network with an absent or formal lump sum;
Provide an original business plan and try to get a small start-up investment from the franchisor;
Look for interested third-party investors on favorable terms.

A common option is when the network provides franchises to its existing employees on the most convenient terms. These are talented managers or heads of divisions who have the ability and desire to become a co-owner of a new branch or retail outlet.

Benefits of working on a franchise

The number of companies that are actively working under a foreign brand has exceeded 10,000 projects.

Each of them appreciated the obvious benefits of cooperation:

Low risk.Entrepreneurs with little experience in financial affairs receive support and advice from the first minutes of work. Many franchisors accompany partners throughout the entire term of the contract, teach new techniques and technologies.
Recognizable trademark... It is easier for a novice businessman to settle in the market “under the wing” of a brand with a good recommendation. The product or service is already known to customers, is in demand and will quickly bring the first income.
Saving time for project promotion... Most businesses take at least 2 years to build their own brand and get the money back. The franchise project can reach self-sufficiency in 5-6 months.
Professional support... Large companies are serious about preparing future franchisees. They are provided with training programs and courses on manufacturing, business and customer service. The personnel who will work on the franchising technology are trained on a free basis. Most brands are ready to provide legal assistance at any stage and provide access to useful information.
Minimum advertising costs... Companies with a recognizable brand name are constantly running large advertising campaigns. Therefore, franchisees can be limited to low-cost advertising in local media and social networks at the level of their region.

The main advantage for a franchise company is the guaranteed sale of a certain volume of products. Brand owners can plan the pace of production and work, future expenses and develop new products.

Disadvantages of a franchise

Any deal has negative points. In the work on the franchising system, a number of shortcomings are also noted that the entrepreneur must remember before the final signing of the contract.

List of disadvantages:

Strict framework... All actions and decisions of the franchisee are regulated by a cooperation agreement with the brand. He has no right to violate the technology of production or the provision of services. Restrictions may relate to the design and location of the premises, its area and the number of personnel.
Inability to choose equipment or raw materials... In addition to monthly interest payments, the contract stipulates the conditions and volumes of purchases of materials only from the franchisor company. This limits technical development and improvement.
High price for profitable franchises... Many projects have a large lump-sum fee and are too expensive for talented entrepreneurs. The cost can exceed $ 50,000 with small recurring payments. This is typical of foreign companies that invest heavily in advertising and the development of their own technologies.
Control by the franchisor... Aspiring entrepreneurs are not always comfortable and easy to work under close brand supervision. This includes regular reports in various forms. All options and terms are stipulated in the contract, so you should weigh the possibilities of such close cooperation. It is better to choose a more little-known project that will give freedom of action and bring pleasure from work.
Limitations in self-expression... Strict technology compliance requirements may include specific promotions, pace of development and expansion. A wide range of marketing tools is available to buyers of a free type of franchise. In this case, the company practically does not interfere with the principles of the franchisee's management.

Among other disadvantages that accompany work, experienced managers emphasize the fast pace of work. The company provides a clear, regulated plan for the next 2-3 years, not allowing you to relax or retreat. All products or services must strictly comply with the franchisor's regulations, and any violation leads to license revocation and termination of cooperation.

How to Buy a Franchise - Basic Steps

After assessing all the risks and prospects, you can start looking for the best offer. Running a franchise business imposes certain responsibilities and restrictions. Therefore, a quick return on investment and the profitability of the project largely depend on the capabilities of the franchisor company.

Important!You can find a franchise in our. It contains the most reliable franchisor companies that have long established themselves in the market!

The choice of a future partner should be considered carefully at each stage of the transaction:

Market analysis and selection of a promising direction activities. Each area has certain problems and disadvantages. Profitability depends on many factors, including the location of the office or retail outlet, the number and level of training of staff.
Finding the optimal franchise in catalogs and websites, careful study of each proposal.
Getting to know the franchise company, working conditions and requirements for applicants. Reputable brands willingly make contact and are ready to provide maximum information.
Communication with established franchiseeswho can provide advice, advice or highlight controversial business issues.
Getting advice from a franchise specialist... It can be found in consulting or legal form. He will help you understand the contract, show the hidden opportunities and pitfalls of the business project. The lawyer will study the proposed documents, check the correctness of the registration of trademarks and licenses.
Assessment of your own financial capabilities... In addition to the initial payment, investments in the design and rental of premises, hiring personnel, execution of documentation and seals may be required.

The final stage will be the conclusion of a franchise agreement with the selected partner, the signing of contracts and fruitful cooperation. Experienced franchisees strongly recommend that novice entrepreneurs consult with lawyers at all stages and analyze every step.

Requirements for a potential franchisee

The financial crisis has forced companies to reconsider their policy of selecting candidates for cooperation. The main criterion is the financial capabilities of the franchisee. In addition to the lump-sum payment, decent expenses will be required for renting and equipping the premises, purchasing the first lots of goods or raw materials.

Franchisors indicate the minimum starting amount that a potential candidate should have:

McDonald's network - over 1 million rubles;
Zara clothing brand - 1.2 million rubles;
Burger King LLC - over 2 million rubles;
Coffee Woods coffee shops - from 200 thousand rubles.

When interviewing representatives of a franchising company, the following points are of interest:

Experience in a managerial position, the ability to lead a team and make decisions;
Knowledge or skills in the chosen field of activity;
Availability of space for production facilities, a restaurant or a workshop;
Psychological stability and ability to work with limitations, under control.

The main problems for partners arise with a different approach to doing business and solving difficult situations. Therefore, foreign companies often conduct special testing and questioning. It helps to assess the potential and stress resistance, the ability to maintain the corporate spirit. Domestic companies prefer work experience and financial stability.

Features and content of the franchise agreement

After choosing what to open for a franchise, the conclusion of an agreement is an important component that determines the rules and regulations of cooperation between the parties. Therefore, you should not neglect the advice of a lawyer, the study of each item.

A franchise agreement (commercial concession or license) must be concluded in writing. The term of validity in this type of relationship is not an obligatory part of the document and can be up to 50 years.

Franchise or commercial concession agreement signed between the franchisor and the franchisee. The first is indicated as a copyright holder transferring certain rights for use. An individual or a legal entity acts as the second party.

The subject of a commercial concession agreement may be: a company's trademark, production technologies or know-how. The volumes and terms of provision must be indicated. The document describes in detail the method and amount of payments of the lump-sum contribution, as well as royalties. By agreement of the parties, these items can be indicated in percentages or in specific numerical terms.

Sometimes a clause on subconcession is indicated in the agreement. It means that, under certain conditions, the franchisee can transfer rights to a third party to carry out business activities. The parties may indicate other situations that can lead to a change in conditions: the unprofitability of an open business project, changes in the composition of management and other circumstances.

Rights and obligations of the parties

A franchise agreement is primarily aimed at securing the rights of the parties and identifying their obligations.

According to the legislation, the franchisor is obliged:

Transfer to the partner in full documents and equipment that is necessary for conducting business;
Guarantee and ensure uninterrupted supply of goods or components of proper quality;
Train staff on the technology of the work process;
Provide franchisees with full comprehensive advice on all issues related to working moments.

The brand reserves the right to monitor the activities of the branch, the quality of products or the provision of mass services to them.

The agreement provides for the following rights and obligations of the franchisee:

Use of the trademark and all technological capacities only in accordance with the rules of the document;
Ensure high quality of products manufactured under this sign;
Observe all the rules for using branded equipment, do not change the technology and recipe;
Do not declassify technology and professional know-how;
Participate in financing an advertising fund, support promotions on behalf of the brand.

The contract may contain other clauses and sections that regulate the relationship between the parties and make their work comfortable. They depend on the type of franchise, type of business, and other indirect factors. The document should not restrict the franchisee's rights, especially in the area of \u200b\u200bpricing and project management. It is subject to mandatory state registration.

Conclusion of a franchise agreement gives an entrepreneur the opportunity to open a profitable project under the guidance of a serious brand. For cooperation to become profitable and full-fledged, it is necessary to register all the exciting moments and nuances, discuss them with an experienced lawyer.

Experts refer to the disadvantages of the agreement as the problem of keeping technologies and recipes secret, as well as negative in the case of franchisees. A serious problem is the success of a branch that leaves the brand network and becomes a competitor in the industry.

Franchisee package contents

After the conclusion of the contract, the company provides the new partner with a franchise package, the contents of which cover the lump-sum fee:

The possibility of using a well-known trademark in the production process;
Developed instructions and recommendations for corporate identity, design and packaging;
Organizational structure development: personnel training and motivation, creation of conditions for work and development, job descriptions;
Information about the product and raw materials, including certificates, norms and technologies;
A complete list of trading partners and wholesale purchasing centers with coordinates;
Instructions for starting and running a business project;
Requirements and recommendations for pricing policy;
Transport schemes.

Franchise packages for each brand may differ, so it is better to specify the exact list of services and documents individually. For small cafes or shops, tableware or packaging materials with a logo, uniforms and room design may be added. In practice, an entrepreneur must get all the conditions for doing business.

Famous companies include in the package ongoing legal and marketing support, consultancy services and staff retraining at various stages. They provide support with government registration, sanitary inspections and reporting. This helps the branch maintain momentum and develop actively.

Popular examples of franchising

Several hundred companies are actively working on the domestic market, constantly expanding their network through franchising.

Based on many parameters and the rate of economic growth, it is possible to make a certain rating of brands offering a ready-made franchise business:

"Fix Price" - a chain of stores where goods are available at one price, already has 2050 outlets;
Pyaterochka is a retail chain with 6,200 supermarkets throughout the country;
Operator "Tele2" - a provider of communications and the Internet with 3100 franchisees at the end of last year;
"KFC" network - at high costs for launching a new cafe, 30,000 outlets are already functioning;
"33 Penguins" - a company that opens an ice cream parlor and is aimed at visitors of all ages (1312 establishments);
"Invitro" - independent laboratories offering a wide range of analyzes at an affordable price (over 700 departments);
"Sportmaster" - favorite stores of fans of an active lifestyle offer excellent conditions for cooperation;
"Orange Elephant" - the most profitable children's franchise of 2015 quickly pays off and in 9 years has opened 360 branches;
Ascona is a furniture factory, the products of which can be purchased at 600 points of sale.

Among fast food and fast food chains, the proposal to open a franchise business can be discussed with representatives of:

McDonald's - the most famous franchise requires a serious approach and large initial investments from applicants (more than 36 thousand establishments in the world);
SUBWAY is a fast food chain with the largest franchise and 43 thousand cafes in many countries;
Russian "Stardogs" - with affordable conditions for small businesses.

All these franchises are in our franchise catalog!

Entrepreneurs who are interested in a franchise without investments are offered cooperation by small companies. They provide comprehensive services or retail goods: the Present Day souvenir brand, the Tvoy Mishka toy store, or the Tvoy Bilet transport company. Their terms and the cost of royalties are within the power of entrepreneurs who do not want to take out loans or borrowings.

How to choose a franchise

Before purchasing a franchise, it is necessary to carefully study the demand in the region, assess the purchasing interest and solvency. It will be correct to put all the indicators in perspective so as not to crash after a few years of work.

An important issue is the reliability and popularity of the franchise partner. Good companies offer not only brand name and equipment, but also ongoing training, advice and loyal financial terms. The most comfortable will be cooperation with minimal intervention and control of the work from the network.

Is it possible to work with several franchises at the same time

Until the last wave of the economic crisis, most established brands did not give entrepreneurs the opportunity to manage several business projects at once. It was believed that the franchisee would not be able to control and develop them successfully, leading to bankruptcy. A significant slowdown in economic growth has led to the development of multifunctional franchising. Many companies began to cooperate with successful entrepreneurs who had experience with this system in other areas.

Experts recommend one businessman to work with no more than two franchisors at the same time. The next business should be started after establishing stable work of the first branch. This option is more suitable for active and creative people who have free time and a team of like-minded people.

Is it possible to take out a loan for a franchise

Projects like this get the approval of banks due to the presence of a well-structured business plan and economic strategy. Compared to independent enterprises, franchisees close in only 15% of cases. Therefore, banks are increasingly developing special programs adapted for this type of business.

Is it worth collaborating with a brand that has few representatives

The domestic franchising market is looking for new directions. Some companies do not have permanent representations in a number of regions. Therefore, buying a franchise from such a brand will bring a bonus in the form of a small number of competitors and sub-franchising in the future. New little-known brands can offer great deals and minimal royalty rates to grow and gain traction faster.

Imagine that an entrepreneur learns about the existence of an interesting and profitable business, say about a fast food restaurant. What comes to mind when you mention a fast food restaurant? Of course, McDonald's.

Why would an entrepreneur create his own restaurant from scratch, which in any case will not withstand any competition with the American giant, when he can open his own McDonald's by franchise?

However, what it is "franchise", "franchising", "franchising package" and other familiar to the ear, but not fully understandable words, he, like many, does not know.

We propose to figure it out.

Find 10 Differences: Franchise, Franchise, Franchise Package

The franchise agreement (a sample of which can be found for review on the Internet) is the basis on which the relationship of the parties is built. The official name of a franchise agreement in Russia is a commercial concession agreement. However, it can be formalized by a set of different contracts.

In turn, a franchise is an object of a franchise agreement. These are the benefits that the franchisee gains, that is, the business model, brand, technology, training from the franchisor, marketing policy tools, and much more.

Beeches

The brand book is a guide to the correct use of the brand that the franchisee has acquired. This is a description of the corporate identity, the rules for the design of points of sale and the design of the office, these are logo products, for example, uniforms, vehicles and packaging. Sometimes there is also a merchandising book (requirements for an assortment range and * POSm) and a logo book (use of a graphic sign).

Thanks to the business book, the franchisee knows which development strategy, pricing policy, what standards and promotion methods are in the company, what are the requirements for the location of outlets. In general, these are all the norms that the franchisee must comply with for the correct conduct of business processes. In fact, this is a guide to action, worked out to the smallest detail, a program of behavior in frequently encountered situations. The line of conduct to be followed by the franchisee

* POSm - Point of Sales materials, materials designed to attract attention and promote goods directly at the points of sale. For example, logo stands, price tags, key rings, mugs, posters.

Let's talk about money

What are flat and royalties? Here is a new franchisee enters into a franchise agreement and is faced with such definitions. What do they mean? How much to pay, to whom and for what?

In fact, a lump-sum fee is a fee that the franchisor charges when buying a franchise for the right to use everything that it provides. However, it is worth noting that quite a few companies operate without a lump-sum fee, making a profit through royalties or through the supply of products to franchisees.

Royalties are relevant for the franchisor if the company's activities are not related to the sale of goods. This is a regular payment to the franchise owner, usually in the form of a percentage of the turnover of the establishment or in the form of a fixed amount.

Companies that make a profit only by supplying products to their franchisees are most interested in their partner being successful in business, since the franchisor's profit directly depends on the number of products sold by the franchisee.

For example, the same entrepreneur who buys a McDonald's franchise will most likely have to pay a lump-sum fee first, and then pay a certain percentage of his fast food restaurant.

Direct and not so franchising

In the end, it is worth highlighting two main types of franchising: direct and sub-franchising.

In direct franchising, the franchise owner sells it directly to the local franchisee, meaning there are no intermediaries between the parent company and the partner in a particular region.

In the case of sub-franchising, the master franchise is sold exclusively to one person in a specific territory. The acquirer of the master franchise becomes a sub-franchisor in this territory and has the right to sell the franchise to other franchisees.

Note that the franchising market continues to grow - new franchises appear, well-known brands are actively developing.

Look for franchises that inspire you, carefully study the franchise package and be aware of what you are paying for. And you can choose the right franchise by looking at the best offers from

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