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Being a businessman, you must have thought of taking a Franchise Business Model of a well-known brand. But, why?
Why does every person in business think taking up franchises is a good way to go about making money? Why is the franchisee of a product better than starting a new business?
Well, these and many more questions pop in our mind when we hear the word ‘Franchise’. So, instead of just contemplating and getting over them like all times, let us know about the real sides of the franchise.
Yes, we said it right: “sides” because there’s never always one side of a story!
Basically, a franchise is granting a license to a local business or a firm (or franchisee) by a person (or franchisor), which gives the person or firm the liberty to trade under the trade name of the franchisor. The franchisee can utilize the entire business package in which they have to compromise all the elements necessary for the product to be sold and have to run with complete assistance throughout their term.
2 Aspects of Franchise Business Model
Now that we have got a rough idea of how a franchise is, let us look at the two sides of it that is, the franchisor’s aspect and the franchisee’s aspect.
Franchisor’s Aspect #1
1. A franchisor is the one who grants a license to a local operator to carry on the business in the name of franchisor’s.
2. The franchisee has to trade under their name. Hence, any product sold won’t have their name but the franchisers on it.
3. Also, they are the ones who instruct the franchisee on how to operate. Since the franchisee is selling its products, it’s the duty of the franchisee to sell it the way its franchisor wants because after all, it’s their name that would come up if anything wrong is sold.
4. The franchisees have a personal stake in the business. It is not that they are just selling it for the franchisor but it’s for their own business prospects too.
5. The franchisor may be involved in major expenditures but at the stage at which you are appointing a franchisee, they give the franchisor initial fee.
– It is a smart way to attain rapid growth in business without large-scale investment because every franchise will be self-financing.
– It is easier and quicker to establish a number of outlets in different areas to supply products or services.
However, as good as it seems, creating a franchise business model chain is not a child’s play. You require a well-laid plan, franchise analysts and other people to guide your way through. Many times, the whole business of popular companies collapse because of poor franchising techniques.
If it can make your business, then it can destroy it too with the same ease so, think twice before taking any step.
Franchisee’s Aspect #2
Establishing your own company can be very risky in the starting. So, it is a lot easier to first set up a firm base to stabilize it from going down and then slowly the risk-taking can commence.
Hence, taking up a franchise is what a person can do to start up their firm. It kick-starts the business in the name of a known brand so, it gets easier to sell the products. You will be able to enjoy all elements of the business without actually taking any risks. Isn’t the whole point of not choosing business streams failed as this point is changed to risk-free?
– It helps you build your own operation along with having the benefit of selling a known brand.
– The risk of your business failing gets reduced as your products are already tried and tested.
– Being a part of a recognized logo, many times you will have the opportunity of selling products in bulk to the usual customers of the brand.
However, the only major drawback of being a franchisee is the heart of a business – Individual Personality. You will not be able to showcase your brand, your product, your creation and hence, yourself through your business till you are having someone else’s franchise business model. Therefore, if you want to get involved in it, make friends with its most brutal disadvantage!
This business gives you everything- money, trusted customer base, quality products, and no risk. However, it fails to provide you with the essence of a business itself. For a franchisee, the whole point of getting into a business kind of gets backfired.
On the other side, for the franchisor, it is no less than another overwhelming turn to aid the business to rise further.
Anyway, among the flowers is where you found it, but it is also where you found its thorns!
With this thought in mind, we wish you Happy Franchising!