Part 19 : Franchisee Business
Computer Skills needed: Nil
Investment : Medium-BIG
Period to learn and master: 6-12 months
We have so far reviewed business options with minimal or no financial investments. Here is a capital intensive business option to consider at a moderate scale with already renowned brands or companies.
In a franchise business model, the owner of the original established business, known as the franchisor, sells the rights to use his brand to an entrepreneur/another businessman called a franchisee. In return, the franchisee agrees to follow or execute the franchisor's business model and to pay the franchisor royalties, fees, percent age of income etc based on sales volume.
Franchising facilitates business/company to grow their businesses without having to invest substantial amounts to build new outlets. Thus, the risk of possible failure is fully transferred to the franchisee who is responsible for coming up with the initial capital. For new business owners with little business experience, franchising gives them a successful business model to start with, which can relieve some of the risk or uncertainty associated with starting a new business activity from the beginning. Because, brands do take time to settle and establish.
There are three main types of franchises as business format, product distribution and management franchise. There are varied roles in these points from view point of financial investment, execution, promotion, selling, man power, management etc
McDonald, DMart, Amul, SubWay, DTDC Courier, EuroKids, Samsung, Tata Motors are few examples of franchisee options, there are hundreds more. There are franchisee options available in most products and services ranging from food, furniture, toys, education to health, hospitality industry.
The Franchisor is the parent company that sells the rights to franchise their brand to prospective franchisees.
The franchisor is the one who has created, nurtured and developed the company, brand and operating mwchanism. Upon the agreement to franchise their business, the franchisor gives franchisees the rights to their successful business, known trademark, good business systems, and knowledge, training and support.
The Franchisee is the individual who gets from this agreement, the rights to sell the products or services and use the proven and established business systems. Although the franchisee is, in essence, buying a pre-established business, franchisees has to work hard in order to gain loyalty in their market/customer segment, attract talent and grow, profit from his franchise business. After all, it is the franchisee is responsible for the day to day opetations/sale.
The franchisor/franchisee relationship should be one built upon mutual respect, trust, understanding, and support. Both are growing and help each other in a way. Although relationships between franchisee and franchisor will differ from brand to brand, one thing always remains the same: the franchisee/franchisor relationship is vital for long term success.
Franchisee carries the whole risk of funds invested and business success. So, one has to be careful in accepting terms & conditions in the agreement with respect to many factors as investments, space, good storage, man power, cost of brand promotion, sharing of revenues, future prospects etc. Due diligence needs to be handled in detail.
Are you interested? Do you have moderate amount of funds and business mentality to work with already successful company or brand? If so, take a step and start studying options of your interest, products or company.
Author, Satish Ranade, is Mumbai based, and in Information Technology business. Since, it will not be possible to take so many calls, kindly send your queries, suggestions in whatsapp message (on his number 9820344725) referring to SSSBIZ, and your name and city. You will receive replies. Also, save his name and number.