The process of doing business often representsa thorny path with many pitfalls. Not all start-up entrepreneurs have experienced mentors, assistants who will be able to tell at a difficult time, and therefore in most cases receive losses. To prevent such sad outcomes, there was such a direction as franchising.
It is a special system of organizationentrepreneurial activity. The subjects of its relations are the owner of a successful enterprise (franchisor) and a businessman (franchisee). This type of activity involves the process of selling goods and services under the name of a well-known brand. It can be like franchising inexpensive clothing, equipment, food, etc.
Franchising involves making initial contributions or making the first purchase of goods. This process must be performed on a monthly basis.
Work on franchising implies compliance withcertain regulations, which is legally approved. There are responsibilities for each side of the relationship. So a company that acts as a franchisor must transfer noy-hai, a license right for a particular trademark, and also help in the organization and sale of products by the second party to the contract.
A company that wishes to cooperate withowner of a successful business, undertakes to guarantee control over the quality of products, make initial payments for current payments, participate in training, engage in a trusted business, adhere to commercial standards, and inform mentors about both achievements and failures.
Like any type of activity, work on a franchisehas advantages and disadvantages. The advantages include minimal risk and at the same time the preservation of legal independence, the absence of costs associated with capital investments, the use of a recognizable brand, access to innovative technologies, the availability of support from experienced partners,
In contrast to the merits of this directionshortcomings are mostly not advertised. This is due to the fact that basically all the failures are related to the multitude of risks that can arise from the immaturity of the economic model and the formalization of processes. There may be problems that arise due to the neglect of junior partners by seniors. Mentors have the opportunity both to abandon the use of a well-known brand, and to break agreements on cooperation. There is also a risk of liquidation of the donor and a lack of ability to manage the growth of the network.
Before you start working on a franchise,it is necessary to carefully evaluate all the opportunities, pros and cons of this line of business. This is because any case in other situations may have a different outcome.