Franchises
28 December 2009With the crisis, many people are starting a business on their own, and one possibility which may be interesting is to mount a franchise.
How does the franchise system? What should be considered?
Franchising is a business partnership in which the franchisor grants the franchisee a number of areas (marketing system itself, use of the brand, know how or know-how, technical assistance, etc.). In return, the franchisee usually pays an initial fee and a monthly fee or royalty for the management services it provides, is also a canon of usual publicity.
The franchise is extensively regulated by various regulations, as there is an European Franchise Code, applicable in Spain, is embodied in Regulation 408/88 of the European Commission, in Article 85.3 and Article 62 in Spain the Retail Trade Act and various rulings of the Supreme Court.
These guarantees mean that the franchisor must be registered franchise of the Ministry of Industry. Additionally, you must provide the franchisee precontractual, which together with details of the franchisor and the accreditation to be in force in the ownership of the mark.
It should also describe the business, the experience of the company and its evolution, the nature of know-how that will convey to the franchisee, and what technical assistance will provide, and many other elements of contracts, such as the duration, conditions resolution and renewal, economic considerations, covenants and exclusivity limitations, if any, in managing the business.
Riding a franchise can be a good choice for beginners in the world of business. May require a lesser financial outlay, we have a system with central support, an already proven business model, we can achieve economies of scale (i.e., as chain stores make up the X, can purchase prices or costs production more competitive than if an individual store).
Furthermore, we start with a brand already known and consolidated, it has an exclusivity in the area, is the global marketing, which also reinforces the image towards customers, and is usually provided with training and technical assistance, and even an integrated computer system.
You could say that you can get many of the advantages of a large company but with a little more or less investment.
Although theoretically we are done, and is a proven business, it is also very important to make a business plan, make a forexcast of revenues and expenses which we have, and how we will cope, if we have to recruit staff, if it must be specialized, we analyze what the potential market, and what has potential for growth, competition study (although not of our own shows, there may be others).
When someone thinks up a franchise is important to try to learn as best as possible to the franchisor, its trajectory, and if possible, visit any center that is already running, to see how the spot, including talking to customers …
Although the model works in general, it is interesting to consider whether the type of business you are thinking mount fits the demographics of the town or city in which you want to install it. Normally and put some limitations on the minimum number of inhabitants, so that at least statistically you have business, but most do not consider it (not to happen, for example, to start a business targeting a young audience in a town with a population aged).
It is also important to compare this alternative to starting a business on our own. For example, if I’m thinking of mounting a franchise consisting of a tapes bar, why not mount it to my taste? Or even if I could adapt the style of a franchise that I like my own, but all profits would be well for me and I will discharge my taste, with my brand, and under my criteria (though of course not enjoy other advantages already mentioned).
It means to assess whether what we offer is worth the franchise would have to pay.
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