We all have had lunch, rented cars, sent parcels, ironing shirts or staying
at a place that with or without us knowing it, are franchised companies. These are commercial operations that are
managed under what is called a business franchising model.
Franchising today is a very important way of doing business, both in North
America and most other parts of the world. As entrepreneurs, we all have
options, to start our own business, to buy a business that has been running for
a few years or to buy a franchise and become a member of the franchising
community. This is why I dedicate this week's article on franchising.
There are different definitions of the term "franchise", although
most refer to a close relationship between two parties, in which one of them
gives the other the right to use an asset, be it a brand or right to sell
certain products or services, under the name or the business format of the
franchisor.
The main features that are identified as important part of a franchise are,
among others, the following:
- The
franchisor entity (the one with the idea, brand or business concept);
- The
franchisee (who takes on this idea, brand or concept for expansion);
- The
franchise contract (which indicates each and every one of the responsibilities,
terms and conditions of the relationship between these parts);
- The
different operational manuals that cover different aspects of the franchise,
such as issues relating to the brand, image, operations and finances, as well
as having the franchise agreement.
Franchising has been defined as a system
of cooperation between different companies linked by a contract under which one
of them, the franchising company, delivers to others, the franchisee , the
right of using a brand and / or a commercial formula embodied in a distinctive
signs, assuring at the same time technical support and regular services needed
to facilitate such exploitation.
A key aspect in franchising is that the franchisor will license the use of
its products, brands and services in exchange for certain fees, that would
range from the franchising fee that is paid in advance, a monthly payment for
royalties or retainers and certain other fees to cover marketing, administration,
operation performance and other issues. As each franchising company ad business
model is different, there are many key aspects to learn and understand when
considering purchasing a franchise. There are many other aspects governing a
franchise that relate to legal, business, trade, and there are laws and
regulations that have been created in many countries, in an effort to control,
regulate and support the growth and rise of franchising companies.
Ell entrepreneurs start with a dream, which turns into ideas; and those that
take the ideas into action succeed most of the time. As a friend and colleague
of mine John Whitt wrote me recently: “Daydreamer and doers =
awesome combo.”
The main purpose of franchising is to continue promoting the operations and
management of a company, which leads to a successful business for new and
existing entrepreneurs. To successfully franchise a business, the franchisor
must meet a number of prerequisites or criteria, including:
- A
recognized Brand;
- A
different and innovative franchising concept;
- That
the company has managed to prove itself as a successful and growing company;
- A
committed management team.
And there are specific criteria the potential franchisee must also meet. To
create a successful franchising system, all parties need to work towards a
common goal. Results today show that there are many ways for growth and
entrepreneurship.
Here’s to your success!
(1) Excerpt
from the book “Motivando al Futuro
Franquiciado”, Luis Vicente Garcia. November 2011
Luis Vicente García is
Management Consultant, a Certified FocalPoint Coach, a Brian Tracy
International Trainer, best-selling Author and an International Speaker.
@lvgarciag
How can you achieve fast and steady growth and guarantee that it is all done in the same way? The answer is very simple: it is all a system, a series of processes and programs the franchisee has to follow, all very well documented in the different kinds of operational manuals all franchising systems (small or large) have. And the franchisee follows a strict training process that allows the new owner (he or she most times call themselves entrepreneurs) to perform at the level the franchisor (the owner of the franchise) requires.
