• When a company is ready for franchise

      What to check before we start development of franchise

      The model of franchise become very popular lately. This gave a reason to many companies to consider to make their own franchise system.

      It is true that the franchise is spread in over 70 areas of the economy. It is true that franchising is the fastest way to expand a company. It is true that the method of the franchise is the easiest way to go on the international market. However, I want to note that not all businesses are suitable for franchise. They must meet certain conditions to get a profitable business model. If these conditions are not available, it is much more appropriate to choose any other type of distribution. There are such a variety and I would gladly help anyone to find the right way for his development.

      According to the International Franchise Association (IFA): "Franchising is defined as an agreement or license between two legally independent parties which gives:

      • A person or group of people (the franchisee) the right to market a product or service using the trademark or trade name of another business (the franchisor)
      • The franchisee the right to market a product or service using the operating methods of the franchisor
      • The franchisee the obligation to pay the franchisor fees for these rights
      • The franchisor the obligation to provide rights and support to franchisees"

      In this definition largely are defined the qualities which have to have the business, to be able to become a franchise. In the first paragraph they talk for trademark and trade name. To make them marketable, they should be imposed on the market. Absolutely unthinkable is that the brand is younger than three years since its establishment. For any shorter period, there are no value to sell.

      Very often when some franchise starting, the franchise system starts with lower prices for initial fee, which usually contain the right of using of the brand. This is due of low popularity of the brand. Naturally the value of that brand grows every year.

      In Bulgaria should not have цомпаниес that have been created after 2010 and thinking about the development of the franchise. Any shorter period does not lead to the clearing of the business model. Inevitably when some business starts he make mistakes of growth. When this mistakes are not cleaned on time, no wonder to get growth of the error. What then franchisor will sell the future partner - very clear - experiment for his bill.

      An important second step before considering to make a franchise is to make pilot site. To be everything done correctly, this pilot site should not match with the site where was born the system. There couldn't be done the separation of the development of completely new object, and clearing the error growth.

      This pilot facility is to check if the model work and if the model is suitable for dublicating. There is also the place to verify the operation of the prepared training for partners and its staff. This corresponds to the second paragraph in the definition of the franchise - "The franchisee the right to market a product or service using the operating methods of the franchisor". Franchisor must have training schedule, which must be held by each employee at every level, situated in time from the time of its introduction until the partner is fully ready to take self-fulfillment of its task.

      Pilot sites must work at least one year to be able to make full financial picture of its development. Only then there will be enough data to make budget plans for future partners and they are realistic.

      Franchises, where franchisors do not speak from the first meeting for planning and budgeting of the business partners are mildly frivolous. Very often that franchisor make franchise systemit to finance his oun business.

      It is crucial to have the know-how which have to be used only in this company. This is a key competitive advantage, which makes it possible to exist and to develop a system. If there is no such thing, or is very easy to copy, in a very short period will occur for another 5-6 such systems, especially if the business is profitable.

      Very often competitive advantage is the extremely narrow specialization in a particular market segment.

      Lastly, but it is extremely important that the franchisor make a franchise from his business only when it is in its peak. The franchisor must know that there is plenty of money in the franchise, but usually it require a lot of investment, before the money come back.

  • Онлайн магазин от Exsitee