The business process is often a bumpy road with many pitfalls. Not all start-up entrepreneurs have experienced mentors, assistants who will be able to prompt at a difficult time, and therefore, in most cases, they suffer losses. In order to prevent such sad outcomes, a direction such as franchising arose.
It represents a special system of business organization. The subjects of her relationship are the owner of a successful enterprise (franchisor) and businessman (franchisee). This type of activity involves the process of selling goods and services under the name of a famous brand. It can be like franchising inexpensive clothes, equipment, food, etc.
Franchising involves making down payments or making the first purchase of goods. Such a process should be performed monthly.
Franchising work implies compliance with certain regulations, which is legally approved. There are responsibilities for each side of the relationship. So a company that acts as a franchisor must transfer no-hi, the 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 wants to cooperate with the owner of a successful business is obliged to guarantee control over the quality of products, make initial payments on current payments, take part in training, engage in trusted business, adhere to commercial standards, and inform tutors of both achievements and failures. .
Like any type of activity, franchise work has advantages and disadvantages. The advantages include minimal risk and at the same time maintaining legal independence, the absence of costs associated with capital investments, the use of a recognizable brand, access to innovative technologies, the presence of support from experienced partners, etc.
Unlike the advantages of this direction, the disadvantages are not generally advertised. This is due to the fact that basically all failures are associated with many risks that may arise due to the immaturity of the economic model and the formalization of processes. Problems may arise that arise due to neglect of younger partners by seniors. Mentors have the opportunity to both refuse to use a well-known brand and break cooperation agreements. There is also a risk of donor elimination and the inability to manage network growth.
Before you start working on a franchise, you must carefully evaluate all the opportunities, pros and cons of this area of activity. This is because any business with a different situation may have a different outcome.