Imagine that an entrepreneur learns about the existence of an interesting and profitable business let's say about the restaurant fast food. What comes to mind when you think of a fast food restaurant? Of course, McDonald's.

Why would an entrepreneur need to create his own restaurant from scratch, which in any case will not withstand any competition with the American giant, when you can open your own McDonald's franchise?

However, he, like many others, does not know what “franchise”, “franchising”, “franchising package” and other words familiar to the ear, but not fully understood, are.

We offer to sort it out.

Spot the 10 Differences: Franchise, Franchise, Franchise Package

The franchise agreement (a sample of which can be found on the Internet for review) is the basis on which the relationship between the parties is built. The official name of the franchise agreement in Russia is a commercial concession agreement. However, it can be made out by a complex of different contracts.

In turn, the franchise is the object of the franchise agreement. These are the benefits that the franchisee acquires, that is, this is a business model, a brand, technology, training from the franchisor, marketing policy tools, and much more.

Beeches

A brand book is a guide to the correct use of a brand acquired by a franchisee. This is a description of the corporate identity, rules for designing points of sale and office design, these are logo products, for example, uniforms, vehicles and packaging. Sometimes there is also a merchandising book (requirements for the product range and * POSm) and a logo book (use of a graphic sign).

Thanks to the business book, the franchisee knows what development strategy to follow, pricing policy what are the standards and methods of promotion in the company, what are the requirements for the location outlets. In general, these are all the rules that the franchisee must comply with in order to properly conduct business processes. In fact, this is a guide to action, worked out to the smallest detail, a program of behavior in frequently encountered situations. The line of conduct to which the franchisee must adhere

* POSm - Point of Sales materials, materials designed to attract attention and promote goods directly at points of sale. For example, logo stands, price tags, key rings, mugs, posters.

Let's talk about money

What is a "lump sum" and "royalties"? Here is a new franchisee enters into a franchise agreement and is faced with such definitions. What do they mean? How much to pay, to whom and for what?

In fact, a lump-sum fee is a fee that the franchisor charges when buying a franchise for the right to use everything that he provides. However, it is worth noting that quite a few companies operate without a lump-sum fee, making a profit through royalties or by supplying franchisees with products.

Royalties are relevant for the franchisor if the company's activities are not related to the sale of goods. This is a regular payment to the franchise owner, usually as a percentage of the establishment's turnover or as a fixed amount.

Companies that make a profit only by supplying products to their franchisees are most interested in their partner's success in business, since the franchisor's profit directly depends on the number of products sold by the franchisee.

For example, the same entrepreneur who buys a McDonald's franchise will most likely have to pay a lump-sum fee first, and then pay a certain percentage from his fast food restaurant.

Direct and not very franchising

Finally, there are two main types of franchising: direct and sub-franchising.

With direct franchising, the franchise owner sells it directly to the local franchisee, that is, there are no intermediaries between the parent company and the partner in a particular region.

In the case of sub-franchising, the master franchise is sold exclusively to one person in a specific territory. The owner of the master franchise becomes a sub-franchisor in that territory and has the right to sell the franchise to other franchisees.

It should be noted that the franchising market continues to grow - new franchises appear, well-known brands are actively developing.

Franchisor (franchisor) is a company or individual entrepreneur, which transfers for a fee the right to conduct business using its name (brand) and image of the presentation of the product. Franchisor- the owner of exclusive rights to any idea, corporate identity or brand. Usually, the franchisor is the owner of the patent to your business idea, trademark owner, etc. Under certain conditions, which are stipulated in the contract, the franchisor transfers to third parties- franchisees their rights - this is the essence of franchising.

Franchisor Initially, independently and at his own expense, he creates a successful product or service, say, a special style of fast food restaurant, the idea of ​​​​shops for the sale of tourist packages, promotes his brand. The franchisor researches the market, creates and develops his business, spends money on its promotion, forms a good reputation and recognizable image (called "brand name"). After the company has proven the efficiency of its idea in the market, the business concept, the successful reproducibility of this business, it can begin to offer third-party entrepreneurs - franchisees who want to repeat such success, buy the right to use the idea, business concept. The franchisor provides who bought from him the right to an idea with various forms of support (marketing, advertising and information, supplies of raw materials and materials, training of specialists, marketing of developed products, etc.). The franchisor is following for the activities of the franchisee, compliance with the terms of the contract, regulates the activities of the franchisee. This is done in order to maintain a good reputation for the idea, the proposed business, and the franchisor itself. At the same time, the franchisor in no way violates the economic and legal independence of the franchisee.

Many people are constantly confused in terms.

For example, half of the population of Russia does not know the difference between a franchise and a franchise.

Moreover, they may not even suspect who it is. H

To remedy this lack of knowledge, let's draw the full marks of distinction between these terms.

How is a franchise different from franchising?

What is a franchisor and franchising? First of all, let's define the term "franchise". She is called conclusion of an agreement between the company / brand and entrepreneur for the purpose of further mutually beneficial cooperation. The investor gets the right to use the promoted trademark in his own region and receives a profit for this.

The company, in turn, expands its network and also receives interest from this through lump-sum contributions or royalties (this is the name of the regular fee for the opportunity to use the trademark. The amount is determined by the franchisor. Many companies have no royalties at all.).

What then is franchising?

Inexperienced businessmen often don't see the difference, and identify this concept with a franchise. But this is fundamentally wrong.

Franchising is the process of acquiring a franchise, as well as the moment of conclusion of an agreement between both parties. Successful examples of this phenomenon include McDonald's, SubWay or Ford.

Finally, who is a franchisor? This is a company that sells certain services or products.

To be called such a definition, brand management needs to offer cooperation to businessmen and investors.

What is it? The entrepreneur enters into an agreement with the company for the opportunity to use its trademark on the proposed terms.

He opens a point in his city, decorated in a corporate style. The company is committed to helping in every possible way. After that, the investor will be called a franchisee.

Aspiring entrepreneurs sometimes do not know or do not fully understand some of the terms that are used in the field of business. Frequently asked questions are related concepts such as franchising and franchise, and the definition of the difference between them.

The growing popularity of such a form of business organization as franchising requires a thorough study of all its features. What are the advantages of this system, are there any disadvantages, and why is it beneficial to use a franchise in the small business sector?

Definition of concepts and their difference

Franchise is translated from French as a benefit and means a certain set of documents and rights to use business elements. These elements can be:

• know-how and technology;
• business practices;
• trademarks, brands, logos;
• brands;
• business models;
• software etc.

In essence, this is the “rental” of a certain brand or trademark, the acquisition of the right to use all its developments, technologies, reputation for personal benefit in the form of profit. - this is the process of buying a franchise, a certain agreement between the parties. Simply put, a franchise is an object of franchising. The parties to this agreement are the franchisor and the franchisee. The first is the one who sells the franchise, the second is the one who buys it.

The contract also stipulates the payment of the cost of the franchise. It is carried out in two forms:

• lump-sum payment - a one-time payment of the cost of the franchise;
• royalties - payment of % of the profits received in the process of using the franchise or the payment of a fixed payment for a certain period.

• produce products in compliance with the requirements for its quality and applied technologies;
• carry out activities in a strictly established place according to the planned scheme;
• use the franchisor's trademark.

What is a franchise business? An expert in the field gives the answer in a video.

History of occurrence

The history of franchising takes its toll more than a century and a half ago, in 1851 Its founder is the owner of a large company that produces sewing machines - Isaac Singer. It was he who first began to sell to independent firms the right to sell, service and repair their products throughout the United States. Thus, Singer not only distributed his product over a large area without any effort, but also provided after-sales service for it.

The next company is General Motors. Its dealers sold cars only of this company. By making a financial contribution to the business, dealers were interested in maintaining the reputation of General Motors and providing quality service when selling its products.

After a successful start, it quickly spread to other large companies. Producers of popular drinks Coca Cola and Pepsi approached it this way: they produced the syrup at the main plant, then distributed it to the franchisee's factories, where the drink acquired the final form of the product and then entered the stores.

Since the beginning of the 20th century, large manufacturers have begun to create and sell their goods to franchisees for its subsequent sale. The seller provided small sellers with discounts and the opportunity to use the trademark. This way of selling goods exists in modern conditions.

After that (30s of the 20th century), franchising spread to the oil industry, namely: gas stations began to be leased to small local entrepreneurs.

In 1945, confectioners-businessmen Baskin and Robbins began to sell some of the new cafes of their rapidly growing network under the terms of using their trademark to outside entrepreneurs. The McDonald brothers achieved great success in the field of franchising. Their fast food restaurants, which opened in the 50s. of the last century, are still very popular and have more than 30 thousand establishments around the world.

At the moment Franchising is one of the most popular and progressive forms of doing business. and is widely distributed both in the West and in Russia.

Advantages

Running a business through franchising is positive sides, as well as negative ones. This system is most suitable for aspiring entrepreneurs who are going to start their own business, but are not confident in their abilities. A franchise provides an opportunity to get your own ready-made business, manage it and gain experience in the business field. In addition, there are the following benefits of franchising.

recognition brand. By franchising, you are essentially buying an established business that customers know, recognize, and often love. No need to spend money on marketing, advertising, technological or design development.

Minimum risks. The probability of the collapse of a large company is much less than a new, unknown enterprise.

Feeling support. Franchisors are interested in maintaining and improving the image of their company, and therefore usually provide assistance subsidiaries. Consulting, advice on doing business, training in the right way management decisions- this is not the whole list information services that can be obtained by the franchisee.

You can choose industry of interest to you and study its performance indicators before starting your own business. Before you spend your money, you will know exactly how soon the investment will pay off and how much the products will be in demand in the market.

Low level of competition. Each franchisee receives its own territory in which to conduct and develop business. There will definitely not be competitors who could have the same franchise in this territory.

disadvantages

You cannot use your ideas or innovations to run a business and must follow a clearly prescribed pattern. Such a business destroys fresh ideas and does not allow the enterprise to develop in a new direction.

Enough high price franchises. To buy it, you will need a lot of money, and it is not known when they will pay off.

Inflexible selection system suppliers. Often, franchisees are forced to purchase raw materials and materials from those suppliers appointed by the franchisor. The terms of such transactions are not always favorable.

Narrow scope of activity. By purchasing a franchise and everything that comes with it (brand, trademark, etc.), you also undertake to conduct your business in the direction indicated by the franchisor, without the right to change anything.

For failure to comply with such stringent requirements, substantial fines or even deprivation of the franchise are provided.

The risks that are the parent company may still go bankrupt. Or draw up a franchise agreement in such a way that you will not receive any benefit from this transaction. So, it is necessary to approach the conclusion of the contract especially carefully, involve experienced and competent lawyers in the case and carefully study the conditions.

Franchise agreement - what is it?

In Russian law, franchising is the name of the commercial concession. This term in its meaning fully corresponds to franchising and their definitions are identical. This one consists of several items:

1. The subject of the contract is, in fact, those rights and benefits that are sold to the franchisor.
2. Parties to the agreement (copyright holder - business owner, user - franchise buyer).
3. The form of the contract (necessarily written, registration with the relevant service is also required).
4. Remuneration (royalty) - its amount and method of deduction.
5. Rights and obligations of the parties (both the copyright holder and the user).
6. Restrictions on the rights of the parties.
7. Contract time.
8. Amendment of the contract (in which cases it is possible to change its terms).
9. Termination of the contract (at the end of the term or at the request of one of the parties).
10. Responsibility (forfeits and fines for violation of the terms of the contract).

Franchising Examples

For better clarity, consider examples successful sale franchises large companies for individual industries.

One of the most prominent representatives of franchising on a global level is the company Ray Kroc's idea to sell company franchises in all cities of America has led to the fact that at the moment the restaurant chain covers more than 30,000 establishments, and its owner has become a billionaire. Now almost every country in the world has at least one McDonald's restaurant, and those who wish to acquire a franchise are subject to rather high requirements.

Another famous example success is the franchising company, one of McDonald's main competitors. She uses the same scheme - selling the rights to the brand, products, trademark and providing full instructions for doing business.

Among automobile companies, the brightest representatives are the mentioned General Motors and Ford who use a franchised dealer system to distribute their vehicles to customers.

The clothing chain does not invest in advertising or marketing, but in opening new points of sale. Thanks to this, the network has 1.5 thousand stores and the brand is recognizable in many countries of the world.

Franchising, despite having certain disadvantages, is an effective form of business organization, especially at the initial level, for entrepreneurs without much work experience or innovative schemes. Such a system allows you to reduce risks, get a recognizable brand and save a lot of effort and money on business promotion.

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Last update:  08/16/2019

Reading time: 10 min.

In this article, we will detail what is a franchise and how does it work , as well as explain the essence of franchising in simple words.

Many, deciding to start their own business, are faced with such a form as franchising (franchise business). But aspiring entrepreneurs have little knowledge and a vague idea about this way of organizing their business.

From the article it becomes known:

• What is a franchise and franchising in business - what are their differences;
• What kinds and types of franchises exist;
• What are the advantages and disadvantages of a franchise business;
• What are examples of highly successful and profitable franchises.

The information provided in this article will be useful both for those people who are just thinking about starting their own business, and for those who want to expand their business.

So, let's begin!

Franchise and franchising: what is it, what is the difference, what are the pros and cons of opening a franchise business - we will talk about all this in this issue in simple and understandable words

The word "franchise" comes from the French franchise, which means "favor" and "privilege".

Franchise ( from English. A franchise is a type of agreement under which one party transfers and another acquires the rights to a business model, use of technology and trademarks.

This term also has a synonym - commercial concession , however, it is used less frequently.

1.1. What is a franchise in simple words - a description of the term + the principle of operation on a real example

If we reformulate this definition in such a way that it is even more understandable, then franchise is the purchase of a right to open a business under the brand name of a well-known brand. At the same time, not only the trademark is used, but also technologies - both production and sales, as well as the concept of entrepreneurial activity.

Thus, an actually ready-made business is bought, the payback and profitability of which have already been tested in practice.

Franchisor and franchisee - who is it?

The party that buys the right to sell goods and services under a certain brand is called franchisee. The party selling such a right is called franchisor.

How does it work in practice?

for example, someone Andrei would like to start working for himself and do business. For this, he either.

After collecting some money, Andrey decides to buy a fast food restaurant franchise. So he acquired the status of a franchisee.

Having organized such a restaurant in his city, Andrei soon began to receive income that he did not have while working for other entrepreneurs.

Now he can open a whole chain of such fast food restaurants in his city.

1.2. Related terms related to franchising

In order to better understand this issue, you need to know other terms that are directly related to franchising and franchising.

Despite the fact that in our country the first franchise agreements began to be concluded relatively recently, in the world this common practice - and there is generally accepted terminology that makes such contracts and relationships between franchisee and franchisor as clear and transparent as possible.

First of all, since a franchise is understood as the transfer of a license, you need to know what it is.

In this case license is the transfer of rights held by the franchisor (know-how, technology, software, etc.).

At the same time, know-how is any information (related to production, product sales, business organization, etc.) that has commercial value, since it is known only to their owners.

That is, under know-how refers to the secrets of doing business or production, on which this or that business is built.

Documents by which the right to use a particular trademark is transferred and purchased can be called differently, while having the same meaning:

• franchise agreement;
• license agreement;
• commercial concession agreement.

When such a right is bought, the buyer (or franchisee) makes what is known as lump-sum fee is a payment for the purchase of a franchise . If we are talking about commodity franchising, then instead of paying a fee, the contract may provide for purchase of a specific inventory.

Often the contract is concluded in such a way that it is periodically required to be renewed. Then a lump-sum fee is paid each time the contract is renewed.

In addition to the lump-sum fee, the franchisee must pay royalty .

What is royalty in a franchise - a description of the term

Under royalty understand those payments that are periodic and payable throughout the term of the franchise agreement. These can be fixed amounts or a certain percentage of the business's profits.

In commodity franchising, periodic purchases of goods act as royalties.

When the contract is signed, the franchisee receives franchise package . It can be like in printed form, as well as in electronic. Such a package includes all the documents and materials with which the franchisee can easily and quickly start a business.

The franchise package must include:

• franchise policy;
• business management guide;
• corporate identity standard passport;
• all necessary legal documents.

Assistance required for correct operation personnel, software, etc.

The franchisor is no less interested than the franchisee in ensuring that the set of documents is as complete as possible - after all, the reputation and popularity of the entire business depends on the correct organization of the business under its trademark.

cherishing their business reputation franchisors take a very responsible approach to the formation of a franchise package.

Take note!

A person who wants to become a franchisee and is looking for the most interesting offer, can get acquainted with companies offering to conclude a franchise agreement on the relevant resources with complete catalog of franchises .

You can always find information both about the companies themselves and about the cost of concluding an agreement, lump-sum and periodic contributions, the amount of investments required to start, as well as contacts where you can contact company representatives to discuss the details of the transaction.

A novice businessman can either simply purchase a franchise and open a business on it, or master franchise, according to which he will become the sole owner of the right to conduct his chosen business in a certain territory (for example, in a city, region, district, etc.).

"Franchise" and "franchising" - what is the difference between these concepts?

2. Is franchising and franchising the same thing or not? 📃

Very often people who do not have an economic education confuse the concepts "franchise" and "franchising". But to be able to distinguish between these two concepts is necessary - especially for those who want to conclude a franchise agreement.

Under the term "franchise" means the very acquisition of the right to sell goods or services under a certain brand name.

Often the word "franchise" is replaced by "franchise package". Although, in fact, the franchise agreement is first signed, followed by the receipt of the company's franchise package. The composition of the franchise package is strictly specified in the contract and can be discussed when signing it.

Franchising: what is it - an overview of the concept in simple words

Franchising is the process of creating, building and running a business on the terms of a franchise agreement.

Thus, the franchise acts as the subject of relations between the franchisor and the franchisee, and franchising means doing business on the terms of the franchisor.

What are the franchises - 7 main types and types

3. Types and types of franchises - 7 main varieties 📑

Since doing business under a franchise agreement has been used for quite some time, there have been several various kinds franchises They may differ in the degree of involvement in business management by the franchisor, in the form of payment for the franchise agreement, in the place of manufacture of products that the franchisee sells, etc.

Thus, everyone who would like to work under a franchise agreement can choose the most suitable option for themselves.

Type 1. Classic or standard franchise

This is the most used franchise in the world. As a rule, such an agreement implies the payment of a lump-sum fee, as well as the presence of periodic deductions in favor of the franchisor.

At the same time, the franchisor has the right to control the process of doing business of the franchisee and make its own adjustments. It can also verify the compliance of the business built by the franchisee under the license agreement with the requirements, rules and codes of the trademark.

Type 2. Free franchise

In the territory Russian Federation It is this form of commercial concession that has received the greatest use.

A distinctive feature of the free franchise- This is a low royalty rate and greater freedom of action for the franchisee.

Thus, the entrepreneur is practically not controlled by the franchisor and has the opportunity to run his own business and develop it independently.

Type 3. Import-substituting franchises

In recent years, due to the introduction of economic sanctions in relation to Russia, it has become increasingly popular purchase of import-substituting franchises . The demand for them is explained very simply - consumers in our country are accustomed to goods and products of European production, which are of high quality.

Since the import into our state and the sale of certain such goods and products is now prohibited, Russian entrepreneurs seek to enter this market and offer consumers similar products, but manufactured in the Russian Federation.

Thus, when buying a franchise, the technology for the production of certain goods and services is acquired, and the production itself takes place on the territory of our country. This is very profitable and allows not only to provide our citizens with the things and products they need, but also to receive good profits from this.

Type 4. Silver franchise (turnkey business)

In this case, we are talking about buying really ready business , in the creation and promotion of which you do not need to invest time and money. The owner of a particular trademark independently opens a branch of his company in a particular city, and then sells this business to a franchisee. As a rule, in this case there are monthly payments - percentage of affiliate profit .

This is a very convenient way to start your own business for those who do not have great experience entrepreneurial activity. First of all, since there is no possibility of making a mistake at the stage of opening an enterprise, and the possibility of a created business not meeting the trademark standards is also excluded.

When buying a silver franchise, you can immediately start working and earning income.

Type 5. Business for rent

Some franchisors prefer rent a business. In this case, the benefit of the franchisee is that he does not need to create and build a business on his own, and the benefit of the franchisor is the ability to receive monthly income without spending time managing the business. By the way, we already wrote about that in one of our publications.

At the same time, the franchise agreement stipulates what percentage of the income the franchisor receives, and what percentage goes to the franchisee. This is a mutually beneficial cooperation and an option suitable for aspiring entrepreneurs.

Type 6. Golden franchise (master franchise)

Those people who already have experience in running a business and who want to work "big" can purchase the so-called "master franchise" .

By concluding such an agreement, the franchisee receives monopoly rights for business in a certain region or city.

Of course, the cost of such a license is very high, but in the future these costs will definitely pay off - after all, the entrepreneur will be able to open a network of companies in this region and remain the only representative of the trademark in the territory designated in the contract.

Type 7. Corporate franchise

This commercial concession agreement is ideal for inexperienced businessmen. It assumes that the brand owner will control the development of the business and be able to run it on their own terms.

Opportunities to make any changes for the franchisee are small. However, it will be easier for a beginner to learn how to do business under the guidance of an experienced team of professionals.

When choosing the type of franchise, you need to evaluate your financial capabilities, ambitions and experience in doing business. In any case, with such a variety of franchise types, there is always a way out - even for those with small start-up capital and experience.

Franchise business - the main pros and cons

4. Advantages and disadvantages of a franchise business 📊

People who would like to become entrepreneurs by buying a franchise often ask themselves the same questions:

• how cost effective is it?
• Does it make sense to invest money, effort and time in franchising?
• What are the advantages and disadvantages of such a business?

To answer these questions, you need to think about pluses and cons starting a franchise business.

Pros (+ ) starting a business with a franchise

There are five main advantages of franchising for the franchise buyer.

Plus 1. Minimal risk when doing business

When an entrepreneur decides to start a business, there is always a chance of failure- the attractiveness of a product or service for consumers may be incorrectly assessed, etc. However, in the case of franchises, this is practically impossible- after all, a novice businessman receives complete instructions for successful business development.

As a result, if everything is done according to the instructions, the profit will not be long in coming. The path that the franchisee has to go through has already been traveled by the owner of the trademark - and it is guaranteed to bring income.

Plus 2. Brand awareness

A lot of money if a company is created "from scratch" , goes to its promotion and brand advertising. When it comes to franchising, such expenses will not be required - after all, the trademark is already well known potential consumers goods or services.

In this case, the company already has a positive reputation, so when working, the franchisee can use an image that has already gained people's trust and is known in the market.

Plus 3. Quick profit

Since there is no need for advertising and time to promote the company, the first profit will be received very soon after the opening of the enterprise under a franchise agreement. And it's not just beautiful words, a proven fact.

So, when McDonalds opened in Moscow, on the first day of its work several thousand people queuing up for this place before his discoveries.

Therefore, there is no need to worry about how to live the first time while the business is at the development stage - the first income will be received very quickly. In a separate article, we also wrote what ways to earn extra money are possible in your free time from your main job.

Plus 4. Minimal spending on advertising campaigns

The lion's share of expenses when opening any company falls on advertising. In addition, it is not so easy to find really good specialists who can attract the maximum number of consumers to the company. Moreover, success is largely determined by the extent to which it is able to retain its customers.

A franchise agreement allows you to avoid all these costs and headaches for a businessman. Franchisors provide their franchisees with a complete package of documents for starting and running a business, and this package includes complete recommendations for running a successful business. advertising campaigns and all kinds of events.

Plus 5. Ability to receive support and receive training

Usually, starting your own business, a person finds himself alone with this situation. He has no one to ask for help or advice. When concluding a commercial concession agreement, everything is different - not only the franchisee is interested in the success of the franchisee, but also the owner trading network . That is why the franchisee will receive maximum support and, if necessary, will undergo full training. As a result, he will be able to successfully conduct his business and receive the desired income.

In addition, most franchisors offer ongoing supervision and assistance from qualified lawyers in situations where such assistance is needed.

Thus, with the full support of the franchisor, the business will develop very quickly, and the franchisee will make a profit. But there are also disadvantages of starting a franchise business.

Disadvantages (− ) of Franchise Business

There are also five main ones.

minus 1. Lack of “self-maneuver” capability

As a rule, all actions of a novice entrepreneur are strictly regulated, and he must adhere to the rules and codes that the franchisor has provided him with.

A businessman does not have the opportunity to show his creativity in the conduct of his business - he must coordinate everything with the owner of the trademark.

Minus 2. The need to make periodic payments or purchase goods and equipment

If the entrepreneur does not work under a franchise agreement, then he can appropriate all the income for himself and spend it as he wishes. And the franchisee must make periodic payments(usually once a month) and, in some cases, purchase goods or equipment from the brand owner. This is - additional expenses , which will need to be deducted from income throughout the duration of the franchise agreement.

Minus 3. High price for franchises

Although the creation own business under a franchise agreement is much easier than without this agreement, franchises cost a lot. This is especially true for well-known and promoted brands and master franchises.

Minus 4. Control by the brand owner

Not every entrepreneur will like that someone controls his every step. And it is impossible to avoid this control when buying a franchise. The franchisor will oversee all business processes to make sure that the franchisee is doing everything possible to extract maximum profit from business.

Minus 5. The impossibility of applying a creative approach

The franchisee has no right to independently choose the direction of development of his business or show creativity in the development of marketing and other programs. It must strictly follow the development program proposed by the franchisor.

Thus, franchising, like any other form of business, has not only advantages.

The table below lists the main criteria (parameters) for comparing the opening of a franchise business and a traditional business:

The table shows that the main differences between a franchise business and a “regular” traditional business are the timing of business promotion, advertising costs, risks, and initial investment. Money and freedom to do business.

Popular franchises for small and medium businesses

5. TOP 5 franchises for those who want to become a franchisee 📄

Before deciding to conclude a franchise agreement, you need to look at real examples such a business. It is worth paying attention to the companies included in TOP-5 the most popular brands offering the conclusion of such an agreement.

1 place."McDonalds"

This company is known, without exaggeration, all over the world. The owners of this company came up with the idea of ​​franchising, deciding to beat the competition and expand their network Catering outside of America.

However, when thinking about acquiring a franchise from this company, you need to prepare for a significant investment at the initial stage. To start this business, you need not only to purchase a franchise for 45 000 dollars, but also have an initial capital of at least 950 000 dollars. Not every novice businessman can afford it.

Most often, franchises are bought by wealthy businessmen as an investment.

2nd place. Popular chain of supermarkets "Perekrestok"

These supermarkets sell products for those who prefer high quality, freshness of products and good service. But in order for this franchise to bring its purchaser a stable good income, the supermarket must be located in a busy and densely populated area of ​​the city, have parking and convenient access roads.

In addition, the franchisor makes high demands on the area of ​​​​the premises in which the supermarket will be located, on holding internal communications, lighting and even window dressing.

3rd place. Subway Restaurant

This is an ideal option for start-up entrepreneurs, because the cost of the initial fee for a franchise agreement is 7 500 dollars. In addition, the franchisor is happy to provide its partners with various bonuses and benefits, reduce the lump-sum fee and provide comprehensive support in resolving legal and marketing issues.

It is for these reasons that the network of these restaurants in Russia is constantly growing. Currently operating approximately 700 such restaurants in different regions of the country.

4th place. "Coffee to go"

Coffee to go coffee houses deservedly occupy the fourth place in the ranking. Since the cost of a franchise is only from 100 to 400 thousand rubles. Many people who want to open their own business on the basis of a franchise agreement opt ​​for this particular brand.

In addition, this is a very popular destination, because there are more and more lovers of high-quality and delicious coffee, as well as those who spend most of the day on the run and cannot stop at a cafe to drink coffee.

5th place. "Orange Elephant"

In fifth place in the TOP-5 is a franchise of a chain of stores with goods for children's creativity"Orange Elephant" The dynamics of the development of these stores is impressive, in addition, this network has not yet been promoted to the maximum and is not present in all cities. And this means that franchisees have a greater chance of success with relatively little competition.

At the same time, the network not only sells, but also manufactures goods for children's creativity presented in its stores. Today the network has franchisees in America, Turkey, Israel, Iceland and many other countries.

Thus, each novice merchant can choose the franchise that is right for him - both in terms of the specifics of the activity, and in terms of cost and requirements for initial capital.

6. FAQ - frequently asked questions regarding franchises 💬

There are questions that are asked most often by those who wish to conclude a franchise agreement.

Question 1. How to choose the right franchise?

First of all, you need to decide on the amount that the entrepreneur is willing to invest in his business at the initial stage. Today you can find both inexpensive franchises and those that require very large financial investments.

There is no need to overestimate your capabilities, because the success of a business largely depends on this.

By selecting several franchisors in the desired price category, you need to study all these brands and answer the following questions for yourself:

• what are they doing (what goods or services are offered);
• what is the policy of these companies;
• what kind of advertising they do.

Based on this, you need to focus on one company - the most suitable for its specifics. This is very important, because a businessman should be happy to deal with his “brainchild”. There is no point in turning into the business of your life what you do not have a soul for.

Then you need to contact the representatives of the company and discuss all your questions regarding the conclusion of the contract. If everything suits you, then the deed is done and the franchise has been chosen.

Question 2. Is it worth opening a franchise business if there is no experience?

One of the main benefits franchising is that it allows you to open your own business, even for those who had nothing to do with the business before.

It is safe to say that in the case of a franchise, the risks for the entrepreneur are minimal. This is due to the fact that, after the conclusion of a commercial concession agreement, the trademark owner (franchisor) provides the novice businessman with a business plan and detailed instructions to create and develop a business. By the way, you can in one of our previous materials.

Thus, the franchisee not only receives a guaranteed income in the very near future, but also invaluable business experience.

Question 3. How much does a franchise cost and what does its cost depend on?

The cost of concluding a franchise agreement can be different.

The price depends on several factors:

• brand promotion;
• type of franchise for example, a master franchise will always cost much more than a standard franchise - but it will also bring large incomes);
• ambitions of the brand owner.

In addition, you need to take into account lump-sum and periodic payments in favor of the franchisor - they can also be attributed to franchise costs.

There are franchises For example, "Orange Elephant"), which stand relatively inexpensive, do not require very large material investments at the initial stage, but quite profitable for your own business.

And there are others, such as, for example, the KFC fast food restaurant franchise, where an initial fee is from 47 thousand dollars, and investments from 700 thousand $.

KFC restaurant franchise

Question 4. Is there a franchise without investments?

Turnkey business without investment- this is probably dream any budding entrepreneur. But is it possible to realize this dream?

Indeed, there are companies that offer to conclude a franchise agreement without the first - lump - sum payment. However, this does not mean that the business does not need to invest money. Franchisees have to invest own funds when building or renting premises, ordering advertising campaigns and paying wages employees. Thus, it is unrealistic to completely avoid costs at the initial stage.

In addition, any franchisor will require royalties, which are usually around 10 % of franchise income.

Therefore, in any case, you must not forget about the necessary expenses. But in the case of a franchise, the business will really pay off much faster than a regular one.

Question 5. What kind of franchise business can be opened in 2020 with minimal investment?

When deciding to open your own business under a franchise agreement in 2020, you need to remember about five most popular destinations , which are more likely to bring quick income:

• Internet sphere;
• the service sector and the provision of services;
• catering industry;
• trade;
• production.

There are franchises that are promising and promise quick profits to their franchisees:

• Multiwindows- a company that sells windows from different materials; initial payment - from 100 thousand rubles.
• TicketCom- a company that puts advertising on checks that are issued to customers when paying for purchases in stores; initial payment - from 150 thousand rubles.
• linguitania– a network of study centers foreign languages, lump-sum contribution - 220 thousand rubles.
• STARDOG!S– catering outlets that sell hot dogs. The lump-sum contribution can range from 22 to 330 thousand rubles.
• Gift Calendar is a chain that sells souvenirs and accessories for the holidays, requiring initial capital in the amount of 790 thousand rubles.

P.S. You can also check out profitable ones for beginners in one of our articles.

7. Conclusion + related video 🎥

Thus, concluding a franchise agreement - a real and fairly easy way to start your business from scratch. It is especially suitable for those who do not yet have experience in creating and managing a business.

In addition, in the process of organizing and running such a business, you can learn a lot from more experienced businessmen - brand owners.

Many successful entrepreneurs today started out by buying a franchise - and they were not mistaken with their choice. Anyone can do it, even if they don't have large quantity money for a down payment!

The RichPro.ru team wishes its readers success in all their business endeavors! We are waiting for your assessments of this material, comments and thoughts on the topic of publication in the comments below. Thanks in advance!