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  • What is franchising? How it works?

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    Franchising is nowadays a rather promising type of entrepreneurial activity, that is, business. This business is based on the sale of business ideas that were developed and tested by enterprises, and then became the object of trade of the latter.

    The strong side of this activity is the lack of chapels for the development of business, and hence - increasing incomes. The company makes a profit at the expense of the monthly payments that the franchise owners bought from it.

    Franchise is an agreement that requires the official permission of the developer of a business idea, which is his intellectual property, to another enterprise or entrepreneur to use it for commercial or non-commercial purposes.




    Total, in fact, franchising is the retail trade in business technologies. Businesses engaged in this business, and this is often large and well-known corporations, through the franchise trade, they advertise their trademark, they conquer new markets.

    Problems in franchising? !

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    The drawback of such a business for owners is the inability to fully control the franchisees using their business ideas. It happens that some of them delay payment, or even brazenly evade them. In addition, the franchisee( buyer) can discredit them if they are, under the guise of this brand, produce low-quality products, obviously violating the instructions of the acquired technology.


    All this obliges professionals engaged in franchising to be very attentive to companies that want to purchase their development. They are interested, that their franchises were bought only in good faith, professionally related to their business and their reputation as entrepreneurs. When choosing to take into account factors such as the tendency to adhere exactly to their instructions, that is, not to abuse the initiative in the process of implementing purchased commercial technology, and even the previous experience of this enterprise.

    It is worth highlighting the ambiguous importance of the future franchising experience, because, on the one hand, an experienced entrepreneur is more inclined to lead an independent commercial strategy and less to listen to instructions from the developer( rightholder) of the business idea. An enterprise where the experience in this area of ​​business is not so significant can discredit the trade brand due to the unprofessional approach, shortcomings in the production, organizational process and so on. As a result, all in the end determines the specificity of a particular type of business, the reputation of the enterprise, the level of its development.



    How to succeed in franchising?


    The decisive step at the start is the search for a franchise buyer, and this is done at the expense of agencies specially involved for such purposes or independently, although often companies use both options simultaneously. In the process of independent search, they use such techniques as organization of conferences, thematic exhibitions, seminars, which are devoted to franchising. It is not unusual for such purposes to use special exchanges( franchising services), where they publish proposals describing the conditions for the acquisition and use of franchises.

    In the last few years, Internet resources have been actively used for this purpose, that is, advertising is carried out through own and foreign online resources. The advantage of this method is its availability and the opportunity not only to conduct highly informative advertising, but also a dialogue with potential buyers of business technologies. The advantage of having your own web resource for such a company is the opportunity to describe in detail the proposed idea of ​​the business, its prospects, possible in its implementation of complexity in a form that is accessible to the future franchisee, as well as indicative initial costs and future income.


    Franchising in the sphere of trade, as in other spheres of service, production is quite a popular business. Often, company data to search for franchisees do not spend anything at all, that is, they are not spent on the services of the exchange of these services, special advertising, special agencies and the like. They find the franchisee at the expense of the passive method of searching. These companies simply develop their business, they win a good reputation in the market, they become known and franchisees find them. It turns out that the more successful the company, the more interest it is from other enterprises wishing to gain access to its business technologies in order to increase its profit margins. As a result, the franchise distributing company, if there is more demand, can tighten the terms of cooperation, playing on their interest in its technologies.



    What should you remember when choosing this form of business?
    Franchising can become a source of good revenue for the company, which by its own example has shown the effectiveness of its business ideas being implemented. In addition to the fact that the success of this type of business is determined by the reputation of the company and the popularity of its trademark, the terms of sale and use of its business ideas should also take into account the interests and goals of future franchisees. It is extremely important that the company can provide at their request full information about the proposed product of the franchisee's requirements, and after selling the franchise - to provide full information support.

    Attention is also a legal aspect, that is, it is a question of drafting a contract. It should take into account all the legal nuances regarding the responsibilities of the parties and the like.

    From the foregoing in this article, it is clear that franchising is a fairly popular activity abroad and in our countries. At the same time, success is determined by the company's commercial achievements, its ability to interest and sell its business ideas to those enterprises that will conscientiously pay franchise payments and not discredit its trademark. In this light, the legal registration of such cooperation is of great importance, that is, that all the duties of the parties are designated, so that in the future there is no ambiguity on this ground.


    Franchisees, in addition to the business technology tested in practice, should also receive information and consulting support, otherwise it will be difficult to use this idea effectively. There is generally a risk of failure of this business project, which means that you can not expect franchise payments from this enterprise.

    While engaged in franchising, remember that many companies are ready to take an active part in the development of commercial technologies sold by them, because the success of their franchisees is their success, so do not abandon your assistants to the mercy of fate. In addition, this affects the pace of their development, reputation, the emergence of new business developments, therefore, and the profitability of their activities. Joint and coordinated with the franchisee work positively affects the commercial successes and the franchisee himself, because he can always rely on qualified consulting support.