Why and How to Franchise Your Business
In today’s world, franchising is playing a significant role in the entrepreneurial business arena. Franchising is a practice where an established company allows another entity (an individual or an organization) to use the company’s already existing business model and brand name. The franchisor (the company that provides the business solution) and the franchisee (the entity that uses it) enter into a contract to use and capitalize on the company’s successful business model and/or it’s existing brand awareness for a faster return on investment. In return, the franchisees pays a franchise fee to the franchisor which is a one time payment, an on-going royalty component is also paid by the franchise to the franchisor usually on a monthly basis.
If you are a successful business owner and if you are thinking why should I franchise, then here is your answer. Franchising is the best option for any company that wants to expand its business without incurring larger capital expenditure. It is more beneficial especially when a company wants to expand its business in a different state or country where it has to wait for government approval and other formalities. The company may not have the expertise to market their products in that particular place due to various reasons. Even if they do by means of franchising they will drastically reduce capital outlay, operations, marketing and all headaches.
As there is always a risk of failure, for most of the companies, expanding their business in a different place isn’t worth the effort. But when franchising you are going to give it to someone else capable of carrying your brand. You don’t have to spend a fortune to establish but can receive a percentage of sales from the franchisee every month. Yes, the parent company would only get a small percent of the profit from the sale made by the franchise but because of the reduced entry barrier entering new regions and expanding exponentially becomes easy.
Now the question arises how to franchise your business. Once you have decided on the franchising route then a clear plan of action is required. Analyze the unique selling point of your product(s) or/and service(s). What makes your business different and better than the competitors? Why would people buy into your concept and what are the key features of your business? If you can readily identify your USPs then you can move to the next step.
The next step is to make that you have full protection over your name, logos, designs and systems. Then learn all about the franchise industry and how it operates in your country and in your business category.
The most important step you need to take is the compiling of a franchise agreement. It is an important document that defines the level of quality and service you need to maintain. Franchising an established brand or company is a huge responsibility for the franchisee and a great risk for the franchisor. It is important to franchise your business only to people or companies that match the mind set and the image of the parent company to avoid risking the goodwill of the brand which has been painfully created over the years.
The franchise agreement draft is a basic design of the agreement and it contains general terms and conditions on franchising. It contains the basic terms and rules for the new franchisee. The franchisor just needs to fill out the information required for the business, such as the address or location of the business, the name of the brands, methods of advertisement, and the payment details, etc. However lot of these terms and conditions would change depending on the nature of one’s business and hence it is important to get expert advice. The draft only serves as a guideline.
Therefore, whenever you are ready to franchise your business, you will need to ensure you have a franchise agreement ready for potential franchisees to sign. By using the franchise agreement sample, you will save time and money for both the parties. Last but not the least, you should ensure that you are covering all the fundamental points pertaining to such an agreement.
About Author :
Franchise Bazar provides information about different types of franchise agreement sample available in the market. Here in this article you can get all the information on Why Franchise consulting is needed for every entrepreneur to grow and expand in the most competitive markets of the world.
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