Franchising

What Exactly Is Franchising?

Franchising is a very popular business model that people who are aspiring to work from themselves often explore. Franchising is the process of a vendor or franchisor grants a license to another peson who is the franchisee.

The franchising license allows the franchisee to trade within their own business but under the umbrella of a particular franchisor. This is a particular attractive prposition as the franchisee is following an established proven business model. Usually the franchisee receives a total business package with everything that is needed for a person with no previous training to establish their own business. In some occasions there are predetermined agrrements of the operating time lenghts with the further option to renew the agreement.

As I have said this business model is very popular and the principle is very simple. A lot of companies who decide to offer franchises see them as a cost effective way to grow their company int the marketplace and as a brand in general.

For the franchisee there are some major benfits.

There is no need to think of an idea as the company has already developed it and tested in the marketplace.
Very well established franchises have already established and proven advertising campaigns and have built up a trusted brand so the franchisee can piggy back of them.
The franchisee usually has access to intensive training programs which cover product knowledge and training, the sale and marketing as well as everything that you need to operate your business in an effective and efficient manner.
Sometimes you can get assistance with the funding of your business whether that be inhouse or approved funding establishments.
In most cases of buying a franchise you also get the added benefit of being asigned a territory to trade in. This reduces competition so there is no effect of saturation of the products or services.

First and foremost you as the franchisee own your business but there may be in some cases where the franchisor remains in control of the product line that you sell and exactly how you are able to advertise and market the said products and services.

As with any business venture there are always financial implications. With franchising there is the initial cost of the franchise. This in most cases can run into tens and sometimes hundreds of thousands of dollars.

According to Entrepreneur.com, at the time of this post, the top 10 Franchises for 2014 range between the following price range.$30.79 Thousand – $13.52 Million.

Here is the link so you can read for yourself – CLICK HERE

A Hefty price tag I am sure that you will agree.

On top of the initial costs there are usually monthy or annual service costs to continue trading. My advice is that you certainly need to have worked out all your numbers to be sure that you can make it a viable business proposition. If they all stack up then all well and good.

My own personal view about franchising is that it can work if you are with an established company. There are many companies nowadays that spring up and offer franchises which are just not worht the money so please be careful.

I also personally think that you are “Buying A Job” as you are still at the beck and call of the franchisor with sometimes severe restrictions.

At the time of this post I have been involved with cleaning services industry for more than 20 years.

In 2003 I looked into a carpet cleaning franchise in the United Kingdom where I live. I can’t remember the exact figures but the cost was in the region of £15,000 and now in 2014 it is just under £20,000. I researched the industry and found the equipment and training which allowed to set up my own carpet cleaning business without the need to buy the franchise. It complimented my already well established window cleaning business and I was able to set the carpet cleaning side of my business for under £3,000. So in effect I saved myself £12,000.

My point is that there are always other options available to people wanting to set up there own business. To this day I still run my cleaning business as well as an Internet Marketing business which I set up in February 2014 for under £1,500.

So in Summary.

Does Franchising work? It can if you have the right products or services but be prepared to invest many thousands of dollars or pounds sterling or whatever your local currency is. You must be prepared to accept that it can take in many cases a very long time to see a return of your investment.

Some people, myself included, think that you are “Buying A Job” so it’s not for me. If this is the path that you go down then I wish you every success.

If you would like to know more more about what I am doing then please feel free to contact me at anytime or you can click the image below and a business associate of mine Stuart Ross, who by the way bought a franchise and after 6 months realised it was not for him, will explain a lot more in detail.