Modern market entrepreneurship is more likely to be profitable business than before. A novice businessman with the help of buying a franchise can open his own business with a guarantee of making a profit and with support for development in all areas of the business from purchasing equipment to obtaining a finished product. marketing strategy development. A franchise is a ready-made successful brand that provides working tools for development in other regions.
In what areas is it possible to organize a franchise business? Check out the experts' opinion!
Franchising Market!
The franchise business is gaining momentum and now there are many companies on the market of franchising services, both Russian and international companies who provides their services for the sale of franchises. Business areas are different, with different entry thresholds, there are not at all expensive available to a beginner, and also which do not require experience in this area from a potential franchisee.
In Russia, a franchise for the provision of services or the sale of goods is mainly common.
In what industries can you start a franchise business? The market offers the following industries: construction; real estate, travel services, beauty salons; clothing and cosmetics stores; establishments Catering–from mini caffeine to large networks like McDonald's; car repair services, training and educational services, laundries, cleaning services and others.
The impetus for the development of franchises was the support of banks that offer specially designed lending programs for novice franchisees with reduced interest rates.
Franchise Rules!
There are many franchise directories, but how to choose the one that can take root in a given region and that will give a stable good income.
The choice of a franchise business should be approached very carefully, having previously checked the franchisor and the business system.
Franchising company check!
First of all, we study the company of the franchisor.
We analyze the rating of the company, its reputation in the market. I recommend referring to sources like http://www.beboss.ru and the Forbes rating.
We check the official registration, availability of patents, licenses to conduct activities.
How long in the market, its achievements, the pace of development.
Is there a network of branches: own or franchised.
Information about open and closed franchises can be obtained from the owner.
Communicate with a representative of the company, pay attention to his openness in giving information, impression and intuition also play a role. 
Criteria for evaluating the franchise system!
When examining conditions, pay attention to the following criteria:
How long does it market? The younger the franchise, the riskier the choice will be.
Features of the proposed product, what are its main differences from others. Are there any documents, patents for the brand.
What are the restrictions on franchisees? For example, he will be prohibited from conducting a similar type of activity with another brand. Is it beneficial for you?
We study the conditions for obtaining and launching a franchise:
How long is the contract?
Which payments are required one-time, and which are monthly. Large down payment and monthly royalties may vary by region. There must be a justification why this particular amount is charged, how royalties are calculated: a fixed rate or a percentage of profits or sales turnover, etc.
What are the conditions for early termination of the contract. How much will it cost to exit the franchise system. There are such burdensome unfavorable conditions for the franchisee in case of exit from the system, such as selling a business at a price below the market price. 
This may be assistance with the choice of premises, staff training, assistance in the purchase of equipment. If there are strict conditions for purchasing from certain suppliers, you need to find out why, perhaps this is one of the ways to make money on you.
What kind of support in marketing promotion, conducting advertising companies supply of promotional items.
What are the preferential conditions for obtaining more favorable conditions. Will there be control by the franchisor, how will it take place.
To make sure of working scheme and to be sure of compliance with the declared support of the franchise business, it is worth talking with existing franchisees.
Ask them: satisfied with the results of the purchased franchise. If not, then find out the reasons for the unprofitability of the enterprise. Whether all the conditions stated in the support contract are observed. It is better to ask the franchisees in the neighboring region so that they do not see you as a direct competitor. Not everyone wants to share the results of their work, but still those who will talk about their results.
What are the benefits of a franchise business?
This type of business is great for beginners. If you do not have experience in entrepreneurial activity, then the franchise can serve as an excellent school to start own business.
Although the franchise imposes a number of restrictions on the choice of development strategy, it serves as an insurance platform for successful development. You get advice on suppliers, organization of processes. You combine both entrepreneurial abilities and organizational skills as a manager-manager.
It is easier to get loans for the development of franchisees, because The franchisor is the guarantor.
Different levels of entry barriers, both for a novice inexperienced businessman and high threshold demanding high standards.
What are the disadvantages of the franchise: who does not suit the business?
Can you do franchising?
This activity is not for everyone! There is a category of entrepreneurs who develop their own businesses based on their ideas and it will be difficult for them to constantly meet the requirements of the franchisor's contract.
You will be promoting someone else's brand, so the brand rating in general affects your income.
You will have to pay a portion of the profit to the franchisor every month, which sometimes adds up to very large sums.
A big mistake is the illusion of novice franchise entrepreneurs that when they buy it, they act as investors, and they don’t have to come up with anything special. Nothing like this - this activity is an ordinary business, just with support, and how it can develop and what income it will be depends only on you.
business ideas and s small investment that will make you richer! Successful business projects with minimal investment!
Franchising as a way of doing business (including starting it from scratch by a novice entrepreneur) appeared in Russia only after perestroika, that is, it is more than two decades old. Therefore, the pros and cons of a franchise should be considered, first of all, based on the experience of European and American businessmen. Although, in Russia, additional advantages of the franchise may come to light, as well as the disadvantages of working on a franchise.
Franchise for the franchisor and for the franchisee
Recall that this is a way of doing business, in which from one hand to another on a reimbursable basis is transferred finished model business. The fact that it is ready and tested in practice is one of the main advantages for the franchisee.
Everything is laid out step by step, the businessman is given a ready-made business model, which needs to be transferred to the new conditions like a blueprint (which are also required so that the franchisee does not later make claims about the unprofitability of the project).
At the same time, you can see how other franchisees of the same brand work, how the outlets belonging to the parent company work, and at any time, both at the opening stage and in the process of activity, count on at least advisory support.
The franchisor, for its part, gets the opportunity to reach new market, to expand to a previously uncovered area or region, where his brand will begin to be recognized and loved. That is, ultimately the franchise will play into the hands of the success and profitability of the main brand. If we are talking about a trade franchise, then this will also be an additional point of sale for the franchisor's products. And do not forget about the lump-sum contribution and royalties - no matter how big they are, money is not superfluous.
Carrying out marketing research
But consider the pros and cons of a franchise business in more detail.
Franchise business: pros and cons for the franchisor
It would seem that it is the franchisor, that is, the owner trademark and the one who transfers the rights to use it wins the most. Advantages of franchising commercial activities list below.
- Free way to expand your business
The franchisor opens his branch for other people's money. And even though most of the profits from his work will go to the new entrepreneur, the owner of the brand will also get it. But the main thing is that you will not have to bear the costs associated with expanding to the regions - rent or purchase of premises, its branding, purchase of trade or production equipment, advertising (if all these items of expenditure are assigned to the franchisee in the contract). Nobody prevents the franchisor later, if the region is successfully developed, and his product becomes recognizable and in demand, to open his own non-franchising representative office here and collect the cream from this business.
- earnings
We are talking about royalties and a lump-sum contribution (the first type of payment is made constantly, the second - one-time). Some large brands that started selling their franchises quite a long time ago do not currently have their own branches, but no one suspects this - the brand is alive and recognizable, more and more of its outlets are constantly opening. A simple example is the Subway franchise. All currently existing restaurants with this name are owned by franchisees, while the franchisor owns the brand and the concept of starting a business, which he successfully sells. A considerable lump-sum contribution (over half a million rubles) and royalties allow trademark owners to earn good money.
- Possibility of permanent control
Dodo Pizza cancels royalties until the end of 2018
According to the franchise agreement, the franchisor has the right to permanent control of the newly opened business. If the conditions originally prescribed are violated, and the franchisee does not want or cannot do anything about it, the franchise can be withdrawn, which will entail the closure of the outlet under this brand. The control mechanism allows the franchisor to keep his finger on the pulse all the time and remove the representative office from the market if something goes wrong and this failure begins to threaten the brand's reputation.
- Minimum risk
If the business fails, all the franchisor will lose is royalties. The main losses (already paid lump-sum fee, etc.) will fall on the shoulders of the franchisee.
- Increasing brand awareness
The more representations of the brand around the world, the more it is recognized and the faster the income grows. If the franchisor has his own enterprises, and there are many of them, then this will play into his hands. However, people's love is equally beneficial for both the franchisor and the franchisee, only the former can not only increase profits, but also sell more franchises due to this.
Cons of a franchise for a franchisor:
Popular franchises in different niches in 2017
Working on a franchise: pros and cons for a franchisee
To begin with, consider the advantages of the franchise, which are still more than the disadvantages:
- Minimum risk when starting a business
This is great option for those who have money to start a business, but no faith in own forces. Or for those who want to minimize risks - after all, the franchise business is more stable, the business model has been tested many times, and the franchisor provides support at the stage of starting and promoting the business. Let you have to pay for all this, but the risk of burnout is much less than that of a free-floating entrepreneur.
- Ready business plan
Everything has already been calculated for you, from the size of the investment to the expected profitability of the business. The plan offered by the franchisor clearly indicates the required amounts, while when starting a business on their own, novice entrepreneurs often cannot calculate their strength the first time and take into account all the necessary expenses.
Aspiring entrepreneurs who decide to start their own business face a lot of questions.
What area to work in? Where to begin? How to organize an enterprise so that it works effectively? Will the business become profitable and pay for itself?
This is only a hundredth of the questions that every novice entrepreneur has to solve when starting a business. Each of the questions important step in building a business. Having stumbled at one of these stages due to inexperience or ignorance sharp corners, the entrepreneur can lose everything. Naturally, this fact scares off many, since no one guarantees success.
A great alternative to starting your own business from scratch is buying a franchise. Franchising is a kind of incubator for small and medium businesses. However, like everything in this world, buying a franchise has both pros and cons. Let's try to figure out what benefits a franchise will give an entrepreneur and what side effects he will have to experience?
Let's start with the benefits of buying a franchise.
Proven business performance. By purchasing a franchise, you will be sure that an enterprise in this area can bring success. Moreover, you will know exactly how to achieve this success. Market research, determination of the most profitable niche, target audience and development of a successful concept - you do not have to spend time and money on this. There will be no need to test the effectiveness of business processes, methods and technologies by trial and error. The franchise will give you all this on a silver platter.
Brand. Brand value in modern world hard to overestimate. People not only overpay for the possession of goods under a certain "brand", but often, when buying, they are guided not quality characteristics, but with their sympathy for certain brands. This situation plays into the hands of the franchisee. Opening a business under a sign famous brand, the entrepreneur immediately receives a ready flow of loyal customers.
Minimum startup costs. As already mentioned, the franchisee receives all the experience and knowledge of the franchisor, accumulated during the opening of their own and franchised enterprises. A clear and precise algorithm, a calculated estimate and budget - fully give an idea of \u200b\u200bthe upcoming costs and almost exclude additional costs that usually appear due to inexperience and ignorance of all the nuances of novice entrepreneurs.
Professional training of employees. Even if you are competent in the field in which you have acquired a franchise, this does not mean that you will be able to train your employees on your own. The franchisor is much more experienced and competent than you, as he had to train more than one hundred employees. In any case, the professionalism of the staff has essential in the success of the entire enterprise. Professional development and special knowledge that employees receive, pledge High Quality and efficiency of the enterprise.
Support and development. A franchise is not only a set of certain methods and guidelines, estimates, calculations and instructions. A franchise involves a permanent partnership. Franchising is, first of all, partnership and even family relations, where the elder brother (franchisor) first teaches the younger brother (franchisee), and then, if difficulties arise, he lends a helping hand.
For the franchisor, the success and prosperity of all its franchisees is important. The franchisor is constantly working to make the work of enterprises, their own and those owned by the franchisee, as efficient as possible. To do this, new technologies are being introduced, changes are being introduced depending on the state of the market, business processes are being optimized and new suppliers are being searched.
In general, all the advantages of franchising work towards one main goal - to reduce the risks of the franchisee, to turn it into short time from a novice entrepreneur to a self-confident businessman. A franchise is a kind of business acceleration program.
However, not everything is so smooth. In addition to the fact that when choosing a franchise, an entrepreneur may run into an unscrupulous franchisor who will not provide him with all the benefits, there are several disadvantages of franchising that you should be aware of.
Rigid rules of cooperation. After the conclusion of the contract, the franchisee must strictly comply with all the rules and requirements of the franchisor. This may concern not only the design, assortment and information system, but also client policy, and ways of working with suppliers. Often, regional peculiarities can make the requirements of the franchisor inappropriate, however, you still have to obey.
Strict quality control. Like the general regulations and system of the company, quality control is also under the close supervision of the franchisor. The entrepreneur must be prepared for additional checks.
Closed list of suppliers. Often the franchisor strictly prescribes the use of the services of certain suppliers, which significantly limits the franchisee's freedom of action in the event of financial or other problems. Also, working with specific suppliers can be completely inappropriate, given the territory and the availability of suppliers with cheaper but no less high-quality products.
Non-competition condition. Often, a commercial concession agreement includes a non-competition clause that prohibits the franchisee from cooperating with other franchisor companies or from opening their own competing business for a certain period of time or in a specific territory, even after the termination of the agreement. This can be a significant problem for entrepreneurs, for whom a franchise is just a trial stage before starting their own business.
Unilateral termination of the contract. If, in the opinion of the franchisor, the franchisee does not comply with the terms of the contract or conducts business improperly, the franchisor has the right to terminate the contract in unilaterally and even initiate legal action to compensate for damages due to illegal use of the brand.
Franchising is one of the most popular business development methods. It is interesting that franchising is used abroad to make money on a brand, while in Russia it is usually used to expand market influence. For a franchise buyer, this is an opportunity, without much business experience, to gain this experience with minimal risks, organize their own business and immediately receive income. However, this way of doing business has not only pluses, but also minuses. What are the advantages and disadvantages of such a phenomenon as franchising?
What is the benefit of franchising
There are three parties that feel the pros and cons of franchising:
- franchisor;
- franchisee;
- society as a whole.
Thanks to this form of business end-user receives high level service and product quality, as the main company constantly monitor the activities of its partners.
Franchising allows you to solve the problem of employment, especially in the regions. Due to the fact that employees receive training, a constant opportunity to improve their skills, it is possible to attract unskilled employees.
In collaboration with foreign companies there is an opportunity to adopt advanced business methods and technologies, test and adapt them to the conditions of the domestic market.
Advantages and disadvantages for the franchisor
Now let's look at the pros and cons of a franchise from a franchisor's point of view. Despite the fact that franchising opens up certain prospects for him, such a solution also hides certain disadvantages.
Advantages
Franchising helps a company expand its operations own enterprises without investing in development or investing at a minimum. Moreover, he immediately profits from this. At the same time, the franchise buyer himself is sincerely interested in his business flourishing. When opening a branch with a hired manager, this does not always happen.
Such a solution as franchising helps to quickly master the markets of both national and international scale. At the same time, it turns out much easier and faster to take into account the peculiarities of the local market, because even an entrepreneur who is inexperienced in doing business knows these features better, understands the desires and needs of the target audience. In addition, such cooperation allows the franchisor to accumulate information regarding new markets and use it in future work.
Often, franchising allows a low-profit enterprise to be brought to a highly profitable level through the sale a large number franchises At the same time, the franchisor receives some guarantee that no one will use his trademark without his knowledge.
disadvantages
The main disadvantage of this form of activity for the franchisor is that when selling a franchise, he receives only a part of the profit from the subsidiary business in the form of royalties. If he had developed this enterprise on his own, he would have received all the income. In addition, the farther away the franchisee is territorially, the more difficult it is to control it. But even at such a distance, he is able to denigrate the reputation of the brand and the entire network with unacceptable actions.
It is also difficult for the parent company to control reporting documentation partner, so it often happens that the franchisee underestimates the amount of income on reportable papers, which allows him to pay smaller amounts of royalties when it is charged in the form of interest. This shortcoming can be solved with the help of a set fixed amount of deductions. But then the franchisor can significantly lose profits if the franchisee is doing very well.
Enormous difficulties arise in the field of trade secrets. Often, partners disclose the features of business methods, recipes and other confidential information that is provided to them in the framework of cooperation. In addition, over time, some franchisees leave the network, opening their own similar business. It turns out that the franchisor independently nurtures and trains a competitor.
Advantages and disadvantages for the franchisee
For an inexperienced entrepreneur, a franchise is - perfect way learn how to run a business, gain the necessary experience, master the market. But for him, the pluses are side by side with significant minuses.
Advantages
The undeniable advantages for the franchisee are that he gets a ready-made business. He does not need to independently study the market, enter it with a new brand, win customer loyalty, establish a sales scheme and system. He receives an already well-known brand with a positive image, which has been tested on the market. The main company will point out to him all the pitfalls in doing business and tell him how to get around them. An entrepreneur quickly enters the market and begins to receive tangible income almost immediately, which is impossible to achieve by starting their own business from scratch. He gets everything at once necessary tools business management and ongoing support, advice and recommendations on business management, solving emerging problems.
Such a business has a low level of risk and is considered one of the most reliable in the world. Since the franchisor himself is interested in developing his network, he can issue loans or act as a guarantor in obtaining them. Banks are more willing to issue loans for opening businesses if the entrepreneur works with a well-known brand. This makes it possible for the franchisee to start a business with little or no own funds.
In addition, he immediately gets access to the product or raw materials for its production at reduced prices, as well as contacts of suppliers and customers. He is also always up to date with the latest market research in this area, which is conducted by the franchisor. While maintaining a certain degree of independence, it is the least exposed to the risk of bankruptcy, since the franchisor is usually ready to help in the event of financial difficulties.
disadvantages
Some types of franchises cannot be acquired without a certain start-up capital. Sometimes its size is quite high. For example, it will take at least $10,000 to open a cleaning business, and at least a hundred thousand dollars to open a mini-hotel.
The remaining franchisees operating in the network are not considered as competitors, but as partners. Therefore, it is necessary to conduct your business, including in their interests. The franchisee must strictly adhere to the rules established by the main company, which are enshrined in the contract signed by him. The contract itself is usually concluded for a fairly long period. Therefore, we must be aware that such cooperation according to someone else's rules will be long-term. The desire to turn it off earlier can lead to serious material losses. But if the franchisor loses his reputation even a little, the shadow automatically falls on each of his franchisees.
But at the same time, the franchisor can sell the business to another owner at any time. He can establish his own rules and requirements, which may be fundamentally different from those that the entrepreneur went to initially. And if the franchisor goes bankrupt, then all franchisees automatically lose their business, no matter how successful it may be in the region.
Each of us has our own talents. Someone is able to give birth to brilliant ideas for creating a business. Another can easily turn existing ideas into a thriving business. And someone can masterfully manage a ready-made business by effectively distributing the resources received, sensibly using production products, in other words, competently managing an enterprise.
It's good when all these talents "sprout together" in one person. But this is not always the case. Moreover, in fact, the combination of all these qualities "rolled into one" is enough a rarity. Of course, gradually gaining experience, an entrepreneur develops certain skills for effective management and development of his business, learns to generate new ideas for business. But how many cones are stuffed during this time, what high price sometimes you have to pay for your own mistakes!
So what to do if you do not have brilliant ideas for starting your own business, or, for example, you have no idea how to put the business ideas that you already have into practice?
In that case, you can try buy a franchise- in fact, a ready-made business. By purchasing a franchise, you get the opportunity to use already established business technologies and, in addition, the trademark of a well-known company. The main thing when buying a franchise is to have good managerial skills and clearly define what kind of business you want to do. Additional expenses while, of course, there will be. But they will justify themselves, because the matter is already established. You will need to develop it and, possibly, make some of your innovations.
Franchise- this is the right to create a commercial company, sell goods and provide services under a commercial concession, or in other words - a license agreement that implies the use trademark and technologies with mutual obligations and benefits between the transferring and receiving parties, provided for a fee and executed in accordance with trademark law.
According to experts, buying a franchise is the fastest way to grow your business. Franchising is one of the most common forms of business development around the world. In Russia, however, franchising is still in its infancy.
What are the advantages and disadvantages of a franchise?
Franchise Benefits
- By purchasing a franchise, a newly minted businessman is not left alone with the problem of developing and promoting his business. The entrepreneur already occupies a certain niche, his products are known, they are respected by buyers. They will come to you and buy from you. Thus, it is possible to bypass the long and costly process of promoting your business.
- No need to think about arranging, searching necessary equipment and raw materials - all this is in the conditions of franchising.
- The franchise owner is interested in informational assistance and support to a businessman who buys the right to use the trademark of his enterprise. Therefore, competent advice and assistance in doing business are guaranteed to you.
- If it is necessary to obtain a loan, the franchise buyer will always have a guarantor (franchise owner).
- To get started in business, you need minimal management skills.
- There is no need to study the market (all monitoring data can be borrowed from the franchise owner).
Franchise Disadvantages
- Initial capital is required to purchase a franchise. It will take a larger amount than to open a business on your own.
- The reputation of the chosen brand becomes the reputation of the franchise buyer (this status is not always positive).
- The need to fulfill the obligations stipulated in the franchise agreement (even if the business does not justify the investment).
So, let's sum up. In my opinion, franchise- it's still good, it's stability. And if you have enough capital to acquire your business, it may be worth looking at buying a franchise.
