In the world of business one of the main problems any new business will have in a cluttered market place is visibility, actually attracting attention. Due to this potential problem many people have turned to franchises over the last few years, prompting a major increase in activity in the sector. So how does it work and what help can you expect to receive?

The beauty of working under a franchise agreement is the fact that you will very often receive extensive training, have a ready made supplier in place and benefit from the name of the franchise company. When you consider that top franchises such as the Starbucks Franchise and McDonalds fast food franchise can change hands for hundreds of thousands of dollars for just one outlet, you may well begin to see the immense power of the sector. This is a sector which has been active for some time, but seems to attract more and more potential customers the more competitive the overall market place becomes.

So what exactly do you get?

There are two ways to look at a franchise business, what does the franchisee receive and what is in it for the franchisor?

The Franchisee

By taking on a franchisor operation a franchisee should receive a mixture of the following :-

Initial Training – As you are in reality an outlet for the existing franchise business there may be certain procedures and functions which need to be carried out to ensure that the structure and public impression of the franchise business is maintained. This may be something to do with the services you provide, the pricing structure, uniforms, etc – basically there needs to be a consistent theme across the board in order to maintain the pulling power of the original franchise business.

Supply Lines – One of the main benefits to a franchisee is the fact that due to the particular nature a franchise business, you should have a ready made supply line already in place. This will ensure that you have access to stock, services and general business equipment which may not be readily available to the public and other business – thereby ensuring that you often join a band of business people with something “exclusive”.

Advice – When a franchise company agrees a new outlet with a franchisee they really need that person to succeed, they need the public to see success and they need to keep their good name. To this end every single franchise operation should (and almost certainly will have) a very detailed advice and help system available to all franchisees. While a franchisee is in all honesty working for themselves, in many ways they are actually working for the core business and representing them to the public. Any errors, mistakes or controversy will not only reflect on the franchisee but they will also reflect on the core franchise business and other franchisees.

Free Promotion – One of the main benefits to buying any franchise outlet is the fact that you are already “piggy backing” on to a ready made business, a business which is probably already well known. When you consider that some of the Fastest Growing Franchises of all time are the likes of Starbucks and McDonalds you begin to see a trend – the company’s name and reputation. If you were to open up “Joe Blog’s” fast food chain on the high street nobody would know who you were, but if you open a McDonalds franchise then everyone knows who you are and what you stand for.

The Franchisor

While obviously in the same “business” as the franchisee, the franchisor has many different angles to consider, but the main benefits are :-

Quality Of Franchisee – While money is money in the business world all good franchisors are able to keep the quality of the franchisees at such a level as to reduce the risk of failure. Very often the high set up fees will put off the business people of this world who may be in for a quick buck and attract those who are more dynamic and long term in their thinking. Very often you will see successful franchisees taking on more and more individual franchises because they know the way the business works, the style and application required.

Set-Up Fees – Many franchisors will charge fairly hefty set-up fees and smaller ongoing fees (perhaps a slice of sales or profits) for their long term assistance. This is a very useful source of income for the franchise company and will obviously grow and grow as the business develops. This is potentially the “holy grail” of the business world, a growing, guaranteed income stream.

Guaranteed Sales – One of the main benefits of creating a business which can be rolled out to franchisees is the guaranteed sales which the franchisors will receive. This is very often an integral part of any arrangement whereby goods, clothing and other services need to be acquired from the franchisor. Not only does this give the franchisor guaranteed income but it also ensures that the look and feel of each and every franchise operation is exactly the same as the core business – i.e. a strong corporate identity.

Conclusion

While there are many Franchise Ideas appearing on a regular basis, you still need to do your homework and ensure that a business is correct for you before taking the plunge. Even though nothing is ever guaranteed in business, when taking on a professional franchise there will be a network already in existence which can assist with any queries or problems which you may have. Whether you are looking to increase your staff (and the implications) or discuss new ideas and thoughts for the future, not to mention the guaranteed supply lines for your business.

Before taking on a franchise you also need to appreciate that both parties need to make a profit and any agreements will be structured in this way. The franchisor would not be able to provide a service to their franchisees unless they had sufficient income, and a franchisee would not be able to operate profitably without intensive assistance from the franchisor. However, while it can be a balancing act to perfect the situation, both parties are there to help each other, which is the only way any franchise business would be able to grow.