Franchise companies. 

A franchise company or a Franchisor basically

• Gives you an authorization to sell or distribute his products and services under a licenses and an agreement for a specified time period until renewed.
• In return the franchisors will receive a percentage of the amount obtained from sales of the franchisee outlet.
• A Franchise company could also be a consultant that maintain a comprehensive database on franchising and bring franchisors and franchises together

Franchising - History

Singer sewing machines was one of the earliest companies to start franchising business. Now there are few hundreds of companies in retail business/services that have successfully implemented franchising and made their brands global.

In most of these cases of successful franchising

• You do not need spend huge money to start your franchisee like you have to do in your own business.
• You receive an all inclusive training from these companies on their value promotion, brand promotion, inventory control, quality control and other aspects.
• The Franchisor basically is optimizing on expansion with your help.
• The Franchising Company should have an exact location or place of operation for prospective franchisees to visit it. It should at least have a pilot program running for orientation of willing and would-be franchisees
• They are reducing their overheads and promoting their brand with your skill and distribution network.

Reasons for franchising?

• Franchising is considered to be the best option for first generation business owners. This saves overhead and operational costs and the franchise company can concentrate more on R&D.
• Most franchising opportunities revolve around the prospect of success and profit.
• Profit are earned much faster than in independent business
• A Franchisee saves money by not setting up an independent business.
• A Franchisor saves time and effort of expansion, recruitment, location hunt and various other administrative issues.

Advantages: Franchise Companies

• Owning a Franchisee is like owning your own business. You earn what you deserve as a return to your time and effort investment other than money.
• As a Franchisee you are satisfied on your achievement that comes instantly after the business is launched. This experience is rewarding and acts as an incentive to upgrade your facilities time to time.
• You launch your business quickly than any other independent businesses you take up the plans and strategies that already exist. You just need money and physical infrastructure to start.
• Franchise companies will help you i.e. the franchisees to grow quickly and reach the breakeven faster than in other businesses that operate independently.

Profile of Franchise Companies

1. Your franchisor should be marketing a unique concept/ services/products. This should be market capturing at national and global levels.
2. Your Franchisor should be able to predict the profitability. You should be motivated enough to take up the business.
3. A Systematic operation procedure should be documented by the Franchisor to orient the possible clients.
4. Your Franchisor is responsible to train you up to make you familiar to the strategies and procedures. It should be responsible to train you in the use of the Systems and Procedures.
5. Your Franchisor should be able to provide you best margin on the trade. The Return on Investment should be more than 20% excluding taxes.
6. Try to look for franchises that are not too expensive. The ideal franchise investment should never exceed $100,000. Expansion of a business also depends on how affordable it is for you to take up.