Any business activity is always associated with risks. When starting your own business, an entrepreneur puts a lot at stake - his capital, personal property, and in some cases, borrowed funds. That is why it is so important at the planning stage to assess the situation on the market, calculate the payback period of the project, etc.

An alternative for many entrepreneurs in the conditions of economic instability that is characteristic of the present time can be a franchise business. This format of work allows you to rely on a business partner - a franchisor, who provides significant support and, in fact, provides a ready-made tool for doing business. However, the franchise also has a "reverse side of the coin" - these are regular deductions in favor of the trademark owner. To find out what it is, and in what cases a franchise business can be profitable for an entrepreneur, read on.

What is a franchise business

To consider a franchise business as one of the possible options for doing business, you need to understand what it is.

Franchising is a format of mutually beneficial business cooperation, in which one party (the franchisor) transfers to another (the franchisee) the right to sell goods and provide services or produce products with subsequent sale under its own brand.

At the same time, the franchisor dictates the conditions for using the brand, including the size of the initial (lump-sum) and subsequent contributions (royalties). For his part, he undertakes to provide a ready-made business system, in other words, a valid business plan. In addition, the franchisor provides the entrepreneur who has concluded an agreement with him with all kinds of support measures in the form of training, the opportunity to use an advertising campaign, etc.

This type of interaction is beneficial for both parties: the franchisor becomes more widely known and enters new markets, and the franchisee gets the opportunity to become a successful businessman, acting according to a ready-made, proven scheme.

In Russia, franchising first became known in the last decades of the last century. It is believed that the first franchise to domestic entrepreneurs was sold by Baskin Robbins in 1993.

I must say that franchising in Russia today is especially popular with representatives of small and medium-sized businesses and is developing to a greater extent in three areas:

• trade;
• service;
• catering.

Why is franchising so popular in small businesses? The answer is quite simple: a franchise can be bought for relatively little money, and cooperation with a large company that organized the transaction allows you to gain invaluable experience in entrepreneurship. Read also what are there to choose an interesting option for yourself.

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Advantages and disadvantages of a franchise business

To understand whether a franchise business is profitable, you should consider in detail the strengths and weaknesses of this type of business.

The obvious advantages of the transaction for the franchisee include the following features of the franchise:

• the contract indicates the exact amount that you will need at the start - you do not need to calculate it yourself, you do not risk making a mistake, the best specialists in the field of business planning have made the calculations for you;
• the popularity of the trademark (name, brand) of the franchisor will provide you with a ready-made client base even in the early stages of doing business;
• franchisor support: training, consulting, marketing programs and much more, because the company is directly interested in your success;
• free advertising - the franchisor invests a lot of money in advertising campaigns, the result of which can be used by you, too, since you work under his name;
• a ready-made scheme of actions - a business plan will allow even an entrepreneur who does not have sufficient knowledge and experience in the field of entrepreneurship to implement his project as part of a franchise;
• the opportunity to cooperate with the franchisor's partners on favorable terms - collective purchases of all the materials necessary for the production and sale of the product (goods, services) will provide substantial discounts, which an individual entrepreneur, if he acts independently, cannot even count on.

Important! As the experience of the franchise business shows, on average, the payback of such a project is achieved in 6-18 months. This is also an advantage for franchisees, since in the current economic crisis, Russian banks are more focused on short-term loans for up to two or three years, rather than on long-term loan programs.

Along with the obvious advantages, the franchising business is characterized by some disadvantages.

First of all, they include constant monitoring of the work of the franchisee, one way or another limiting his independence. The activities of the entrepreneur must comply with the established standards developed and implemented by the franchisor. Most large companies are very strict about the quality of customer service for franchisees. This is justified by the intention to maintain the existing image and credibility of the company.

In addition, an entrepreneur will need to constantly pay for a ready-made business model (within the framework of the contract). Franchisees are initially required to pay a lump sum representing the cost of starting the franchise. Further, regular payments are to be made - royalties in the form of a percentage of profits or a specific amount indicated in the contract.

Among others, the lack of clear rules and regulations in Russian legislation governing the operation of franchising systems can be attributed to the disadvantages of a franchise business. This circumstance is one of the reasons for restraining the development of franchising relations in Russia.

For more information about all the pros and cons of a franchise business, see the following video:

Which is better - a franchise or your own business

When opening any business, you need to be guided not only by economic prerequisites. It is important to take into account the region in which the future entrepreneur is going to operate, the socio-demographic situation that is typical for this region. If you are planning to acquire a franchise of a particular company, it is advisable to evaluate the future partner for fame and trust among consumers in your area.

When thinking about the topic “franchise or own business”, you need to have an idea of ​​\u200b\u200bin which area the activity will be carried out. Where the market is full of well-known and popular brands (trade in clothes and shoes, fast food), it will not be easy for an entrepreneur who decides to compete with large companies.

An important role in resolving this issue is played by the businessman's own ambitions. You need to understand that when buying a franchise, you come under the close attention of the franchisor, which will largely restrain your activity. The development of an enterprise that goes beyond the business plan will simply be unacceptable.

The franchise is ideal for entrepreneurs who have their own capital, but have no idea how to profitably use it for profit. Investments in such a project will allow not only to find yourself in the business world, but also, with the support of an experienced partner, to build a successful enterprise that brings high income.

A franchise is an agreement between the franchisee (you) and the franchisor, allowing you to use its brand in your work.

The conditions offered by companies to their franchisees vary. As a rule, by signing the agreement, the entrepreneur, in addition to the rights to use the trademark, receives:

• assistance in drawing up a detailed business plan;
• legal support;
• advice on issues related to the operation of the franchise;
• information and advertising support;
• assistance in finding premises and its design;
• supply of necessary goods and consumables;
• assistance in staff training.

Franchise work involves that in return, the entrepreneur must pay a one-time fee, which is called lumpy, as well as monthly pay a percentage of gross revenue (royalties). The average royalty rate is 6.5%.

Chains of hotels and restaurants require about 4.5% from their franchisees.

The exception is some fast food chains, where royalties can be up to 10%. Above average requirements for companies specializing in education services and real estate sales.

Is it profitable to operate a franchise?

It's no secret that many novice franchisees initially have one question: "franchise: is it profitable?"

Statistics give an affirmative answer to this question. Using the feedback on the work of the franchise, it should be stated that out of 10 franchised enterprises, 8 manage to celebrate their fifth anniversary.

For comparison: only half of their own businesses can boast of such a result.

By approaching a large company to purchase a franchise license, an entrepreneur eliminates many risks.

Franchisees at the start have several main advantages over those who decide to start a business on their own:

1. Recognizable brand and positive reputation.

   Consumers are familiar with the service or product you offer. You do not need to earn fame and a positive image from scratch. In Soviet times, university professors liked to repeat: “First you work for the record book, then the record book works for you.” Buying a franchise can be likened to an A student's record that fell into your hands. Clients come with a pre-formed good opinion about your business, you are only required to provide services at the proper level.

2. Transparent rules.

   Starting a franchise business is much easier than starting your own business. For each of your questions, the consultants of the franchisor company already have an answer. You do not have to guess whether the consumer needs your product, how to find a room, how to arrange it and what prices to charge. Representatives of the company do not forget about their franchisees even after starting a business. You can always seek advice. Franchisees only need to have funds, a desire to work on the terms offered, and an understanding of the specifics of the business.

3. Reduced risks.

   Franchising companies have studied the market well and are familiar with the level of demand for their product. The risks of opening a new point of sale have already been assessed, so the franchisor even names an approximate payback period for invested funds. As a rule, it is from 1 to 9 months.

Therefore, the answer to the question "is it worth buying a franchise" seems obvious - yes, it is worth it.

Starting a franchise business also comes with some risks. Franchise risks involve the following: dishonesty of the franchise company, its refusal to renew the contract and the risk of unprofitability. It is impossible to completely eliminate the element of risk, but you can always minimize it.

So, based on the above arguments, we can safely answer “yes” to the question of interest to many, “is franchising profitable today?”

Buying: what should I look for?

Franchising has become a popular way to start your own business in recent years.

Today, licenses for the use of their brand are offered not only by world-famous companies with a long history, but also by domestic newcomers. How not to make a mistake with the choice?

Let us consider in more detail what pitfalls are possible when buying a franchise.

1. Gather as much information about the franchisor as you can.

   How long has it been on the market, what is its income, how well established are business processes, whether it has a positive reputation among customers - all this can be found out by studying trusted sources on the Internet, as well as reviews on social networks and on specialized sites.

2. Read the terms of the contract carefully and ask as many questions as you can. An alarming sign should be considered a huge desire of company representatives to sell you a license, combined with a habit of evasively answering questions. This behavior may indicate several problems. For example, a company has not yet worked out business processes and cannot predict risks, or selling a franchise is just a way to earn money, and not start mutually beneficial cooperation.

   By signing the contract, you can be left alone with your worries and solve all problems on your own.

3. Contact more experienced people. Show the cooperation agreement to an independent lawyer, ask your friends who used the services of the company, their opinion, try to find contacts of other entrepreneurs who bought the franchise.
4. A company's refusal to renew a license agreement is one of the most frustrating moments in the franchise business. An entrepreneur can study the contract, consult with other franchisees and find information about the franchisor's similar practice, but it is impossible to be completely safe. You will have to rely on your own instincts.
5. The risks of opening a franchise business are significantly lower than those that you will face if you decide to work on your own. Despite this, there is always the possibility of not reaching payback. Assess the prospects of starting a business as if you were starting your own from scratch. Do not blindly trust a well-known brand: if your city already has several fast food restaurants, should you open another one? Think about what is really missing in your city.
6. Choose a franchise based on market needs, not brand hype.

Features of franchising in Russia

Working under a franchise has several features that are important to keep in mind before purchasing a license.

Franchising involves limiting the franchisee in their decisions. The franchisor company can control not only the range of goods and services, but also the design of the premises, the content of advertisements, recruitment and other details of your work.

Studying the activities of the company and the franchise agreement will help you understand if this business model is right for you. If you feel that it will be uncomfortable for you to implement it, you may need to look for another option.

The peculiarities of the franchise also lie in the fact that the signing of the agreement does not mean that all the worries can be shifted onto the shoulders of the franchisor's consultants.

The responsibility for the functioning of the enterprise lies with the franchisee., the company only provides all possible support. Some consider buying a franchise as a good investment, on a par with buying shares or real estate for rent.

For many novice franchisees, the question often arises: is it difficult to work on a franchise? Of course, there is no definite answer to this question, but it should be borne in mind that opening an enterprise will require your attention and time, and you should be prepared for this. A successful business is impossible without hard work.

Own business or franchise?

Only you can answer this question. Do you want to start your own business, are you confident in your business idea and are you not afraid of risk? Then go sailing on your own.

Do you have start-up capital, but are you afraid of the unpredictability of the market? Then your choice is a franchise enterprise.

Thus, if you have a question: "franchise or your own business", pay attention to the above arguments when choosing!

Pros and cons

Doubts about whether to buy a franchise or start building a business yourself can dissipate after a detailed study of all the advantages and disadvantages of this form of business.

Own business from scratch: pros and cons

Many successful businessmen recall that in their youth it was difficult for them to conform to generally accepted norms. Apple, Virgin, the activities of Mark Cuban convincingly prove that the rules in business can be rewritten for themselves.

If you're looking for that kind of freedom, then buying a franchise won't satisfy you. But if you want to make money and like to work in a team, then the franchise business is just right for you.

We hope that in our article you have learned about what a "franchise" is, and also found the answer to the question "is it worth buying a franchise." Good luck!

01Jun

Hello! In this article, we will talk about starting a franchise business.

Today you will learn:

• What are the benefits of running a franchise business?
• What is the best franchise business to start.

What is a franchise

Let's start with the main thing - the definition of a franchise.

Franchise - a set of benefits that allow a legal entity or individual to use the company's brand.

More simple:

Franchise – the right to use the brand, technology and experience of a well-known company.

The person who buys a franchise is called a "franchisee". The franchisor is the one who grants the right to use the brand.

That is, the very concept of a franchise implies the purchase of the right to work under the name of a well-known company. At the same time, you can buy not only the brand, but also all the marketing and strategic developments that will allow you to start a business.

Also, most companies are responsible for equipment, choosing a place to do business, developing an initial advertising plan, and many other things that make it possible to succeed.

It is worth talking about advertising separately. Since in most cases you are buying a ready-made brand, the market has already taken care of it. And a developed network of franchises allows you to advertise the same product by several businessmen, which significantly reduces the cost of promotion.

The franchising system is widely used in public catering. The brightest representative is McDonald's. The company has been promoting its services on a franchise model for over 30 years.

Franchise types

Specialists subdivide several types of franchises:

1. classical. The most popular type of franchise in Europe. The owner pays the initial amount for the purchase of the franchise, regular contributions in the form of a % of the yield and operates under close supervision by the franchisor.
2. free. The most popular type of franchise in Russia. The owner gets almost complete freedom of action, an approximate business plan of action and minimal contributions. Characterized by an average down payment.
3. Import-substituting. Creating products that are similar to well-known brands.
4. Full construction. When choosing this model, the franchisor himself creates a business and transfers it to the manager for a fee. The profit is divided depending on the terms of the contract between the manager and the franchisor.
5. Rent. Almost the same as a turnkey business, with the only difference being that the business is leased out for a fixed period.
6. Master Franchise. Purchase of monopoly rights to conduct business in the region. The franchisee has the right to decide how to conduct business. He receives only general advice on how to conduct business, but under this model, intervention from the company will be minimal.
7. Corporate. The owner simply creates under the name of a well-known brand, but makes most of the decisions on his own. The franchisor can only tell him his suppliers, the main activities of the company and the range. The businessman himself is responsible for everything else.

The chosen type of franchise will depend on the number, experience and aspirations of the franchisee.

At the same time, the free form of a franchise is more typical for the Russian economy, in which the franchisor is only interested in the initial payment - the purchase of the brand. For this, he gives a recipe for a successful business, as well as contacts for most suppliers.

This is where the collaboration almost ends. The franchisee and the franchisor will only discuss issues together and promote common goods and services.

But Europeans often choose a stricter classical model due to the fact that it provides constant assistance from the franchisor, and, accordingly, supervision over the quality of doing business. With this option, freedom is lost, and with it the probability of making a mistake.

Pros and cons of a franchise

In order to study the positive and negative aspects of starting a franchise business, you need to touch on statistics. Official data says that about 80% of start-up entrepreneurs are weeded out in the first year. And from the remaining 20 - 15 after 5 years of work.

Of course, this statistic considers the sale of rights, the purchase by large companies and other transactions beneficial for the businessman to be a failure. But the general trend is this - about 1/3 of real businesses are successful with start-up entrepreneurs.

And from here follows the main positive side of the franchise - reliability. In fact, after the purchase, you get a ready-made recipe for how to run a working business. With all the suppliers, the choice of products and services, a multi-year team of analysts and a clear one that includes all the little things, down to the heating requirements of the building.

Buying a franchise of a well-known brand, you will receive a clear plan on how to make a successful business that will bring profit within a few years.

According to official statistics, aspiring entrepreneurs who have chosen a franchising model as the development of their business save up to 5 years for the development of their own company.

Of the implicit pluses, one can still distinguish:

• from the franchisor;
• Availability of trusted suppliers;
• Advertising campaign within the brand.

Franchising statistics are somewhat different than in real business. About 60% of franchise businesses are successful. At the same time, 30 out of 40 were at a loss due to their own mistakes, due to deviation from the franchisor's business plan.

And the remaining 10% incorrectly chose the region for business promotion. That is, if you choose the right region and fully follow the advice of the company, then the business will bring a stable income.

But in addition to the pros, there are several significant disadvantages that can weed out most novice businessmen.

Minuses:

• Price;
• Ease of doing business.

And if everything is clear with the first - for example, it may take up to 30 million rubles to open a small McDonald's restaurant, then with the second everything is not so clear.

On the one hand, everything is simple - there are working tips that must be followed, and the profit will not be long in coming. On the other hand, an entrepreneur will not gain experience by trying different strategies, “filling bumps” and coping with crises.

A franchise business is more like a game according to predetermined rules - do it and you will get a stable business and income. After a few years, you may be allowed to "change the menu" or "add a small shop."

And now we have reached the restrictions and requirements that most franchisors impose on potential buyers of the brand.

If we touch on the most popular - franchised fast food, then there are a lot of requirements:

• To buildings;
• to the staff;
• To the menu;
• To the franchisee.

As well as many restrictions, such as: do not change the menu, train the first employees strictly from the franchisor, buy equipment from such and such a manufacturer, purchase only from these suppliers for the first time, etc. Each has individual conditions, but the essence is approximately the same: do the same, as well-known representatives of the brand.

But at the same time, one should not think that such actions according to the template will be unprofitable. Most large companies that are concerned about their franchisees being successful conduct analytical work, during which they identify the needs of the region, features, which product should be launched, what is the most convenient time for this, etc.

The team will make a full-fledged analysis of how to make a brand successful in an average city or metropolis, what is more profitable to launch in central Russia, and what in the southern regions.

Is it worth starting a franchise business?

From the previous point, it became clear that the franchise has both its pros and cons.

Summarizing all this, it can be noted that:

If you find a good franchisor and follow his advice, you will get a successful business that will bring a stable profit in 90% of cases. At the same time, a number of restrictions are imposed on the businessman, which are set by the franchisor, in an attempt to protect him from wrong decisions.

It follows that running a franchise business is a great way to start your entrepreneurial journey. But working with big brands will require a significant amount of money. Therefore, it is better to start your own business with cooperation with medium-sized franchisors.

For more experienced businessmen, working with large franchisors saves a significant amount of time on project promotion. From 1 to 3 years to get your share in the market and from 2 to 4 to be able to fully gain a foothold in it.

How to start a franchise business

Starting a franchise business is quite easy. It is enough to go through 7 steps, after which you can have a legal and highly profitable business.

Step 1. Determining the sphere

Unlike the countries of Europe and America, where fast food dominates steadily and confidently, franchising promotion in the field of retail sales of non-food products is more popular in Russia.

Then comes the provision of various services and only after that comes fast food. Food retail and occupies 3% of the total volume of the Russian franchising market.

Consider each of the possible areas separately:

• Retail. Represents interaction with major brands that operate in the region. In fact, it will be the purchase of wholesale consignments of goods and retail sales. Outstanding representatives who provide their goods for sale are Lacoste, Oodji. Those who send purchased goods to their franchisees - Sportmaster, Sela, etc.;
• Catering. Everything is simple here. You either rent a place at the food court and sell food and drinks under the brand name of a well-known brand. The menu is chosen by the franchisor, he also provides a database of suppliers, checks the premises and trains the staff. The most famous representatives are Subway, McDonalds;
• Production. The most profitable and least liquid way to invest in a franchise. You can produce under a franchise: vegetables, flowers, bakery products and other similar products. The franchisor most often participates in the creation of production, shares recipes for creation and its channels for selling products in the region. A prominent representative of the production franchise is Pokrovsky bakeries;
• Clothes and shoes of famous brands. Opening stores of famous brands is quite a profitable business. You will sell a range of well-known products in your region, while receiving full advertising support from the franchisor. Basically, you just open a branch store. Well-known brands - H&M, Timeout.

The choice of the field of activity depends entirely on the preferences of the businessman. In each of the segments, you can find both franchises with a small entry threshold - 100-400 thousand rubles, and large giants - from 20 million rubles per brand. At the same time, the sphere of production remains the most difficult, and the sphere of retail trade remains the least demanding on the manager's qualifications.

Step 2. Choosing a specific franchise and completing training

After choosing a niche, you will need to carefully study all the franchise offers. To do this, you can use our. The choice you make will directly affect your profit.

The qualifications of the franchisor will depend on:

• Profitability of the enterprise;
• Stability;
• Competitiveness;
• Demand.

As mentioned earlier, with a good franchisor, you will get a working recipe for a business that will bring long-term income. But a bad partner can only take the money and give a rough plan that contains general instructions on how to create some kind of business.

Signs of a good franchisor:

• brand awareness;
• Availability of a training center;
• Research of the region;
• Availability of supplier base;
• Clear rules and requirements;
• Real profitability figures;
• Investments in advertising.

All these points show the attitude of the franchisor towards the buyers of the franchise. It makes no sense for a well-known brand to sell a low-quality product - including its name. The learning center indicates that some of the secrets of how the company's business is conducted have not been made public and they still have to learn.

A good analytical team that researches the needs of the region and builds a supplier base speaks volumes about the quality of doing business. Only those who bet on results can afford to invest in information and analysis.

The presence of clear requirements is an invariable quality of a good franchisor. Since he is interested in the franchisee developing and not making mistakes, he will protect him by setting clear requirements.

It is also aimed at maintaining the brand. And investments in advertising mean that, for the most part, at the expense of the franchisor, a businessman will be able to get good advertising for his business and quickly attract customers.

Step 3. Document preparation

At this stage, you should choose the legal form in which you will work on a franchise. There are two options for doing business: as or.

Running a business as a sole trader has a number of benefits:

• Ease and speed of opening.

But at the same time, you will be liable with your property for the obligations of your individual entrepreneur. However, even if you work at a loss, you will need to pay 35,000 a year to the social security fund.

Also, an individual entrepreneur cannot hire a large staff of workers - which can significantly slow down business development.

At the same time, the LLC has one significant plus - in the case of liability, liability can only be collected from the property of the company.

At the same time, LLC has a more complex and accounting system, and has a time-consuming state registration procedure.

When choosing a legal form, it should be borne in mind that when choosing an individual entrepreneur, all types of business related to cigarettes, etc. will not be available to you.

Step 4. Search and refurbishment of the premises

In any business, space plays a huge role. That is why every franchisor has a clear idea of ​​what it should be like for successful business.

When examining the various franchises in the conditions, the requirements for the premises will be indicated each time.

In most of them:

• Volume from ** square meters;
• The presence of a water supply;
• Compliance with all safety standards;
• Various specific features. Varies from business to business.

Some allow their franchisees to rent the premises, while others insist that it be their own.

Most franchisors operating in different regions of Russia have their own bases of suitable premises for each city. You can also use consultants from franchisors who will quickly find a place for business. This is one of the advantages of working with medium and large brands.

Step 5. Purchase of equipment

One of the easiest steps. The franchisor issues contacts of all suppliers, or is completely independently engaged in the purchase and delivery of equipment. Also, specialists can deal with the installation of all equipment. About 80% of all costs are spent on the premises and preparation of equipment before opening your own business.

At the same time, if you work with European brands, you will need to purchase quite expensive equipment, and it will not be possible to buy Russian analogues. And because of the high price, the quality of the equipment will be appropriate.

For example, for German equipment purchased by McDonald's franchisees, the warranty is from 10 to 30 years.

Step 6. Preliminary preparation

The process of preliminary preparation includes: the purchase of goods, the preparation of the premises, the conduct of an advertising campaign and the test launch of the store/restaurant. This process will be led by the franchisor's specialists: their main task is to find flaws and eliminate them even before the launch, along the way teaching the businessman various subtleties of doing business.

It can take from 1 to 3 months to prepare a business in advance.

Step 7. Starting a business

After preliminary preparation, it is time to start the business. For the first time after the launch, the franchisor's specialists and analysts will closely monitor the performance of the store/restaurant. After a few months, the franchisee will have more freedom, for example, to vary the assortment of the store.

After 1-2 years have passed, the franchisee will be able to fully take control of the business and choose suppliers of goods, train employees on their own and build a sales line as they see fit.

That is, over time, any franchisee gets much more freedom, regardless of the chosen form of franchise. Even with the classic model with such a tough franchisor as McDonalds, after 1 year you can change the menu, after a year and a half you can create your own dishes, and after 2 years you can create your own dishes on the territory of the restaurant and next to it.

All about paying a franchise

Now let's talk in more detail about the financial side of the issue.

When selling a franchise, the franchisor has two options:

• Require only a down payment, which will pay off all the costs of assistance in starting a business;
• Require a down payment, as well as monthly (quarterly or annual) contributions in the amount of % of the business.

The franchise fee is called a lump-sum fee. This is a one-time payment, which is calculated from all the costs that the franchisor will have to bear to open a business, as well as payment for its services.

The monthly fee for using a franchise is called a royalty.

There are 3 types of royalties:

• Percentage of turnover;
• Percentage from the markup of goods;
• Fixed royalty.

The most commonly used percentage of turnover - from the amount of income withheld from 5 to 30% monthly, depending on how profitable the business is.

At the same time, as mentioned earlier, if the franchisor charges only a lump-sum fee as a franchise fee, this means that he will be less interested in developing your business.

It will be enough for him to receive a large amount once, give the business plan and leave in an unknown direction, leaving the businessman to deal with his own project on his own.

On the other hand, large royalties can negatively affect the profitability of a business. True, most franchisors take into account the profitability of their projects, so they set quite adequate rates of 5-15% of the profit per month. This makes it possible to earn money from the entire branch network, and at the same time leave them a significant amount of profit.

There is another contribution - advertising. Thanks to him, an advertising budget is formed, which is spent on promoting the whole brand in all regions. Thus, paying from 10 to 100 thousand rubles a month, depending on the volume of business, you will be able to receive full-fledged advertising in your region, as well as increase brand confidence around the world, which also has a positive effect on sales.

Franchise Examples

In the end, let's look at 3 large franchises in three different areas: McDonald's, Pyaterochka, Lacoste.

McDonald's.

Having appeared on the Russian market relatively recently, a large catering giant began to dictate its own, rather harsh conditions.

In order to be eligible to use a McDonald's franchise, you must:

• Have capital from 10 to 40 million rubles, depending on the city and the size of the restaurant. At the same time, at least 50% of the funds must be own, not borrowed. The remaining 50% you can pay within 7 years at a minimum percentage of the company itself;
• Get paid training. Tuition price - $ 10,000;
• Have extensive experience in business or catering.

In fact, in order to open a McDonald's franchise, you must either be an established businessman or have extensive experience in the food service industry.

The McDonald's lump sum is $45,000. Royalties - 12.5%. Payback period - 3-5 years.

Pyaterochka.

Retail grocery stores in Russia prefer to develop organically - not by selling franchises, but by independently expanding production areas and absorbing regional retail chains.

But X5 Retail Group, the owners of Pyaterochka, Perekrestok and Karusel stores, decided to create a franchise network of grocery stores in Russia with fairly loyal conditions.

Terms:

• Availability of own premises (long-term lease is suitable);
• Positive business reputation;
• The presence of a trading floor from 100 sq. m.

Lump sum - 750,000 - 1,000,000 rubles. There is no legal royalty. But here lies one important detail - according to the contract, the franchisee receives a commission in the amount of 14 to 17% of the store's income. Quite a profitable scheme for start-up entrepreneurs.

The payback period for the business is 1.5-2 years. A great option for businessmen with no experience.

Lacoste.

The most controversial one on this list.

There are few requirements, but they are quite tough:

• Presence of own premises - 100-150 sq. m.;
• Experience in retail sales and own clothing stores.

There are no lump-sum fees and royalties. You will buy branded clothes, shoes and accessories and sell them in your store. The franchisor will need to pay for the products and the mandatory advertising percentage.

The payback period depends on the businessman. The freest franchisor, only for the most experienced entrepreneurs.

These three franchisors show a completely different approach to franchising. One is a classic European with tight boundaries and excellent strategy. The second is a typical Russian, with a rather strange approach in the form of agency fees. And the third is an American, with favorable conditions for himself, who is looking for an experienced partner.

Each franchisor is an individual and a company with decades of experience behind it. Consider all the features when choosing a partner, up to the size of the room and the severity of the conditions.

Conclusion

Starting a franchise business is the most profitable way for aspiring entrepreneurs to start their own business. In Russia, the most popular franchises with investments ranging from 400 thousand to 4 million rubles.

If you have such capital, then literally in 1.5 - 3 years you will be able to recoup all investments and reach an income of 40 to 500 thousand rubles a month.

Starting a business is usually associated with doubts about the direction of the activity, as well as a number of questions about how to implement it. Many entrepreneurs prefer not to "reinvent the wheel" and opt for a well-promoted business idea that is in demand in a particular region. It would seem that this is necessary: ​​buy the right to use the brand and collect laurels. However, not everything is so simple.

About whether it is worth starting your business with a franchise, as well as what advantages and disadvantages it has, you can find out by reading the article.

What is a franchise

Franchise is:

• object of the franchise agreement;
• a set of benefits that provide for the transfer of the right to use the brand from the franchisor (seller of benefits) to the franchisee (buyer).

Features of the franchise agreement:

• the object of the contract can be both a trademark and a technology;
• clauses of the agreement provide for mutual obligations between the seller and the purchaser of goods, as well as conditions, in particular preferential terms, for the use of a franchise;
• the use of the franchise is carried out on a paid basis;
• the contract establishes the term for the use of benefits, as well as the region in which the franchisee has the right to conduct its activities;
• the legitimacy of a franchise agreement is governed by special legal acts developed to protect intellectual property.

To understand how a franchise works, it is best to look at examples of its use that are well known to a wide range of users. Now the Subway franchise is in demand and in demand among buyers, on the example of which we will consider the procedure for the practical implementation of the franchise agreement.

The cost of the franchise depends on the size of the initial or so-called lump-sum fee, the purpose of which is to pay for the direct use of the brand. The peculiarity of this registration fee lies in its non-refundable nature.

If we talk about the Subway brand, then before opening the first restaurant you will have to pay a fee of 12 thousand dollars, and this amount does not include VAT. To open a second restaurant, less funds will be required, namely 9 thousand dollars, and the third, however, like each subsequent one, will require six thousand, again excluding tax. Opening a kiosk under this trademark involves paying a fee, the amount of which is negotiated on a case-by-case basis, but, as a rule, does not exceed 50% of the amount that you would have to pay when opening a restaurant.

Based on the foregoing, we can conclude that opening a franchise business, as well as in any other way, requires a lot of money, therefore, if you decide to go into business, without initial capital. In addition, the acquisition of a franchise cannot guarantee 100% success of your enterprise, since franchising relationships, along with advantages, also have a number of disadvantages.

A franchise, in fact, is just a good foundation for your business, the further development of which will depend only on you and on the efforts you make, so before buying a franchise on a startup, you need to weigh all the pros and cons and objectively evaluate your opportunities, both financial and moral.

In addition, in addition to the registration non-refundable fee, there will be other expenses, the total amount of which will be from 100 to 200 thousand dollars, which must also be taken into account when planning a future franchise business.

As for income, then at first you should not particularly count on it, especially if you took part of the money to purchase a franchise or pay for related services on credit. However, if you direct the business in the right direction and make the necessary efforts, success will not be long in coming, because hyped trademark, whatever one may say, gives its owner a lot of advantages, the first of which is the absence of the need for advertising and attracting customers. As a rule, the brand name is known to everyone and is popular.

Franchise Benefits

Before listing the advantages of a franchise, it should be noted that there are much more of them than disadvantages, primarily because the franchisor guarantees full support for the business at all stages of its development.

The concept of support includes the provision by the franchisor of the following services:

1. advising franchisees on all issues that are directly related to the implementation of entrepreneurial activities;
2. providing materials necessary for the manufacture of products, and finished goods;
3. provision of related documents, legal support of the transaction, as well as other legal transactions, such as obtaining permits necessary for the implementation of activities, in the relevant authorities;
4. all kinds of assistance in the successful sale of products and promotion of the franchise enterprise;
5. franchisee personnel training, provision of relevant instructions and recommendations regarding the conduct of business;
6. assistance in the maintenance of the enterprise.

The presented list of services that the franchisor usually undertakes to provide is not exhaustive and can be supplemented by secondary items, for example, providing the franchisee with special equipment or providing information about the technologies used by the franchisor.

Franchise Disadvantages

Along with the advantages of a franchise business, there are also some disadvantages, such as:

• the need for a large investment of funds at the initial stage of business development (payment of the registration fee, as well as fairly large associated costs);
• the presence of financial obligations to the franchisor, the fulfillment of which does not depend on how the business develops, that is, even in the event of a failure, which is not excluded, one can not count on release from the obligations established by the contract;
• the amount of profit received from a franchise business will be somewhat less than from a similar activity, but without a franchise. Remember that part of the income will be transferred to the owner of the brand, the right to use which you have acquired;
• constant dependence on the franchisor, in the event that the latter decides to stop operating and close its network, all you can count on is doing business until the end of the contract, after this period the case will have to be closed. In addition, even if the franchisor does not plan to wind down, all the difficulties that he will face will also be reflected in the functioning of your enterprise, especially when it comes to reputation issues.

Summing up, one can single out three basic rules that a beginner must follow when starting a franchise business:

1. evaluate objectively your financial and moral capabilities (payment of the registration fee and monthly payments);
2. pay special attention to the study of the franchise agreement, it is advisable to enlist the help of a specialist in the field of law;
3. choose the direction in which you understand and which is interesting to you, otherwise failure cannot be avoided.

If you have any questions about starting a franchise business, then our online lawyer on duty is ready to promptly advise you.

• 1. Is the franchise profitable?
• 2. Negative aspects of franchising
• 3. What is more profitable - a franchise or your own business
• 4. Which franchise is more profitable

Almost every aspiring entrepreneur is faced with a choice one day: start a business from scratch or work on a franchise. And this question is far from being idle, since the money and effort invested is at stake.

Is a franchise profitable?

A franchise is a special form of agreement in which an organization company (franchisor) transfers to an entrepreneur (franchisee) the right to work under its own name. However, she also allows him to use his trademarks.

Other benefits:

• fast promotion of business (due to work under a well-known brand);
• the opportunity to receive free tutorials and consultations;
• the ability to quickly pass the breakeven point;
• low level of competition (one franchisee always works in one territory!)
• no need to spend on advertising.

For comparison: an entrepreneur who opened a business himself, at first, must work for the trust of customers, so there is no need to talk about any quick promotion or quick profit. In addition, he always has many competitors.

Negative aspects of franchising

Franchising, like any other type of business, has its drawbacks. These primarily include the high cost of the starter package. Starting your own business sometimes costs less than buying a franchise.

Other cons:

• the need to follow the rules of the company;
• the inability to develop creatively (an entrepreneur cannot put his idea of ​​business promotion into practice!);
• the need to purchase raw materials only from those suppliers, the list of which was presented by the franchisor (they do not always have the most favorable conditions!).

In this regard, it is easier for an “independent” businessman. He can set his own rules, almost constantly change suppliers, implement any ideas. But he is also capable of acquiring large debts and problems along the way. The franchisee, on the other hand, works according to a ready-made business model, proven in practice, and can always consult with a partner, so it is easier for him to succeed.

What is more profitable - a franchise or your own business

In fact, there is no clear answer here. You need to look at your capabilities and ambitions, the region where you open a business, the field of activity, and the availability of funds. A franchise is beneficial for those entrepreneurs who have capital, but do not know how to use it properly to generate income. It will help them find their way into the world of business, start moving through it with the help of experienced "comrades" and build a highly profitable enterprise from scratch. But to all future franchisees, 2 pieces of advice can be given:

1. Carefully read the terms of the contract so that you do not lose money later (some companies go to different tricks to achieve the maximum restriction of the freedom of a businessman and reduce his profits in their favor).
2. Choose only proven franchisors (the world is arranged in such a way that you can always run into the tricks of scammers).

It is worth opening your own business only in cases where you are completely confident in the success of the enterprise, you can literally count competitors on your fingers, since there are few of them, and you do not want anyone to command you. The latter is because the organizing company will always restrain the activity of its partner.
Deviation from the business plan is unacceptable. All questions must be agreed with the managers of the franchisor.

Which franchise is the best

Of course, the franchise that pays off quickly and brings the maximum income is more profitable. You can get acquainted with the list of popular and profitable franchises on the pages of the portal site.

Here are just a few of them:

1. Edem.rf is a portal franchise where drivers and passengers meet.
2. Eshemoda is for connoisseurs of designer bags and beautiful accessories.
3. AutoDiscount69 - for those who want to sell auto parts.

And many others.

Last advice: when considering the question of which franchise is more profitable for a businessman, always try not only to look at the reviews of other franchisees, but also to think with your own head. After all, the business that “didn’t work” for one entrepreneur can become “golden” for another. We hope that you now know whether the franchise is beneficial specifically for you. Success and prosperity in business!