Who is a franchisee. What is a franchise in simple words

Franchising is a form of cooperation when a well-known brand offers a novice entrepreneur to acquire the right to use his name. The subject of sale is not only the name (trademark), but also technologies, equipment, a package of documents, and a marketing strategy. Together they make up a complete business model, which the entrepreneur has the right to use immediately after the purchase.

Important! The franchisor (the selling side) transfers the technology to the franchisee (the buying side) to get the business back on track as quickly as possible. The proposed business model is called a franchise.

Principles of franchising

Experienced businessmen know that starting a business from scratch is extremely difficult. Even with an idea, a budget, and advertising, selling a thing without a story is much harder than a Gucci scarf and Versace glasses. It takes years to develop a business; the first months you have to make financial injections without the hope of getting a return. But you have to make a living and feed your family. And then franchising comes to the aid of a novice businessman.

This is interesting! The word Franchise originally appeared in French, but it was the inhabitants of the English-speaking countries who put into it the economic meaning that it has today. Therefore, the English pronunciation of the word was fixed.

Visiting a Burger club restaurant, wearing Sali shoes, buying a can of Coca-Cola, a person is unaware that he is the object of franchising. The famous Isaac Singer is considered the first franchisor. By transferring the rights to sell and repair his sewing machines to other businessmen, he spread the prototype of modern franchising throughout the United States.

What is the difference between franchising and franchising

Pros and cons of franchising

The secret of the popularity of this type of entrepreneurship is simple: it is beneficial for both parties. The franchisor benefits from acquiring reliable business partners, controlling his trademark and generating additional income. The benefit of the franchisee is based on receiving clear and understandable instructions for starting a business and guarantees that the goods will be bought and the money spent will be returned.

System disadvantages:

1. dependence of the franchisee on the franchisor - in case of dishonesty of the latter, the entrepreneur will spend money and will not receive the expected effect in return
2. inequality of the transaction - although the nuances of cooperation are negotiated by both parties jointly, experienced lawyers of the selling party insert clauses into the contract that provide them with benefits in any case.
3. the complexity of conducting civilized franchising in Russian conditions - an imbalance between the standard of living in large cities and regions can lead to the fact that the idea, which went “with a bang” in Moscow, will not cause any enthusiasm in Saratov or the Far East.

An additional risk of franchising "in Russian" is the minimum participation in the transaction on the part of the state. In Western countries, franchisees receive benefits from banks and state guarantees; franchising gives them an edge. In Russia, this is a business at your own peril and risk; banks refuse soft loans, the success of the business depends on the entrepreneurial spirit and efforts of the franchisee, the honesty and conscientiousness of the franchisor.

The disadvantages of the system lead to the next question: how to minimize the threat of losing money, find a good franchisor, buy a profitable franchise.

How to write a good franchise agreement

Acquiring rights from famous brands is a win-win option, which means super income and minimal risk. But the starting capital for buying such a franchise is measured in millions of rubles. A novice businessman cannot afford this option - he is looking for a franchisor with loyal conditions for beginners. This is used by unscrupulous companies that seek to sell air under the guise of a franchise.

What to look for when drafting a contract

1. The subjects of the contract can only be legal entities.
2. It is useful to ask Rospatent if the franchisor legally owns what he sells, ask to present the relevant documents.
3. As in any contract, the rights and obligations of the parties, the size of the lump-sum (initial) contribution and the percentage of deductions from profits (if any) should be clearly and unambiguously prescribed.
4. Be sure to indicate the amount of transferred rights: what exactly the buyer pays for. Here it is important to stipulate the time of using someone else's trademark and the question of the work of competitors on their territory.
5. It is advisable to provide for the actions of the parties in the event of termination of the contract. Beginning businessmen often neglect this point - and make a mistake. A real businessman must foresee everything.

Important! The general rule is that all issues of future cooperation are clarified in advance and documented.

How to choose the best franchise

Although there is no official grading, franchisors are divided into those who are interested in their reputation and close cooperation, and those who want to sell more franchises and wash their hands. The first ones put forward detailed conditions and present a list of restrictions. The fact that the owner of the brand cares about how things go for the wards is a plus. But strict control is sometimes not to the liking of a free businessman. If the terms of the contract are not fulfilled, the franchisor will terminate the relationship and will not return the money.

But franchisors of the first category provide novice entrepreneurs with really working tools. By following their step-by-step instructions, even an inexperienced franchisee will set things right and get a legitimate (and most importantly, quick) profit. Such patrons not only give general recommendations, they offer to help with equipment, materials, teach, tell all the subtleties of the chosen direction literally on the fingers. They are interested in the success of the subsidiary and the latter's profit.

Hello dear readers! Welcome to the blog!

What does the term franchise mean? Wikipedia, but here I will explain what a franchise is in simple words and with examples. In addition, if you have already begun to think about building your own business, from the article you will find out what is more profitable, starting your business from scratch or opening a franchise business?

From the article you will learn:

3. How much does a franchise cost?

4. Types of franchising.

5. The advantage of opening a franchise business.

9. Summary.

1. What is a franchise in simple terms?

In simple words, we can say that a franchise is a rental of developed, proven, debugged, working business processes.

If you are going to buy a franchise of a well-known brand (become a franchisee), then along with the right to use it, you will receive all the instructions for producing the product and doing business, namely: how to hire staff, how to train them, how to work with clients, and so on, everything down to the smallest detail.

You do not need to invent anything, because there is already a ready-made, proven business model that generates income. Naturally, you will have to pay part of the profit to the franchisor (the owner of this franchise) for using the business model developed and tested by him and guaranteed to make a profit.

The franchisee is the buyer of the franchise. The franchisor is the owner, the seller of the franchise.

Now, with an example, it will immediately become clear what is at stake.

2. The most striking example of a franchise is McDonald's.

Do you know that McDonald's restaurants that are open in your city, and in almost all cities of the world, operate under a franchise?

It is often said that McDonald's is generally the ancestor of franchising. Let's take a short digression into history, or rather: into the success story of McDonald's.

The worldwide popularity of the fast food chain was brought not by the founders of the McDonald's restaurant (the McDonald brothers), but by the businessman Ray Kroc, who was then not very successful. He was engaged in the sale of small equipment for the manufacture of milkshakes to restaurants.

When he went to a roadside restaurant, he was amazed at how quickly people were served and how popular the quick service system was. He got an idea sell franchises of such services under the brand name McDonald's throughout America. And he turned with this proposal to the brothers.

Ray arranged with the brothers to rent a system for building their business from them, in order to subsequently sell it to other businessmen. He paid them money to give him all the recipes for hamburgers, told him what equipment they use, how they increase the speed of service, how they train staff, and many other secrets with which they built a successful business.

Ray Kroc needed $15,000 and was denied a loan, so he had to take a chance and mortgage his house. He was then 52 years old. He wasn't wrong.

Ray Kroc is now a billionaire. There are over 30,000 McDonald's restaurants in the world.

3. How much does a franchise cost?

What determines the cost of a franchise? Many factors, but mostly:

• from brand awareness;
• from the territory of distribution of the franchise;
• from the term of the contract.

So, how much money will it take to buy a franchise? There are 2 ways to pay the franchise: lump sum and royalties.

When buying a franchise, you need to make a lump-sum payment.

A lump sum is a one-time payment for the right to use a product, brand, or business model.

There is also a monthly payment - a percentage of turnover. It is not always installed, there are franchises with only a one-time payment (lump sum).

Royalty is a monthly payment, it is like a rent for the opportunity to use a promoted brand (usually it is 5-10% of turnover).

There is another important and large part of the costs when buying a franchise - this is the initial capital.

Initial capital is the amount of investment in the business. You will receive information from the franchisor about how much money you will need to open a point of sale.

Consider the components of the cost of the franchise on the example of the same McDonald's.

How much does a McDonald's franchise cost?

• Franchise cost: $45,000;
• Royalties (monthly payments): from 12% of turnover;
• Initial capital: from $1 million;
• Contract term: 20 years (renewable).

4. Types of franchising.

Commodity franchising is the right to sell goods of a certain brand. Under such franchises, 90% of stores in shopping centers such as H&M, Zara, Baldinini and others are opened in the world.

Manufacturing franchise is the right to produce goods of a certain brand. Vivid examples are Pepsi, Coca-Cola and others.

business franchising is the right to open a business in the franchisor's network. Widespread in the field of catering, services, in the hotel business. Examples are McDonald's, Hilton and others.

5. Benefits of starting a franchise business.

According to official data, in the vast majority of countries in the world, a franchise is the most popular type of business. Let's see why. The answer is simple. You need to look for it in the statistics of the life cycle of opening enterprises. You've probably heard of this sad statistic.

85% of new businesses go bankrupt within the first 5 years of their existence.

The same indicator for franchised enterprises is only 15%.

Pros of starting a franchise business

• Brand recognition. Franchises, as a rule, sell well-known, promoted, trusted brands.
• Rapid expansion of business. Good revenue will begin to arrive literally from the next day the business is opened.
• Minimum advertising costs. Firstly, the brand itself speaks for itself and does not require advertising. Secondly, the franchisor provides promotional materials and proven methods of advertising.
• Support and training. You may not have business experience. The franchisor is interested in you as soon as possible to train and train programs and courses for effective business. Reduced business risk. Of course, the probability of failure exists, but it is minimized, as a proven, effective business technology is used.
• In fairness, it must be said about some of the disadvantages of working on a franchise. But they, in my opinion, are insignificant, in comparison with advantages.

Cons of starting a franchise business

• The high cost of some franchises.
• control by the franchisor.
• Limiting the creativity of the franchisee.

6. Top 50 most profitable franchises in the world.

For many years, the top 10 profitable franchises in the world include McDonald's, Subway, KFC and other fast food franchises.

KFC. Number of franchises purchased: over 14,000 Opening costs: $1.3 million – $2.5 million

McDonald's. Number of franchises purchased: over 30,000 Opening costs: $1.0 million – $2.3 million

Number of franchises purchased: over 42,000 Opening costs: $116,600-$263,200

If you are interested in seeing the full list of the Top 50 Most Profitable Franchises in the World, you can find it in this article. The top 50 franchises in the world.

7. 25 most profitable franchises in Russia - 2016 according to Forbes.

• the ratio of start-up investments and profit;
• the ratio of profit to revenue;
• average annual income.

A complete list of the 25 most profitable franchises in Russia can be found on the website of the publication. Forbes .

8. How to choose the right franchise?

When choosing a franchise, the first thing to consider is that you like the business. It is also extremely important to consider the following criteria for choosing a franchise.

The lifespan of the company. The state of the company is the more stable, the longer it exists on the market.

Company expansion rate. The more stores open a year, the more successful it is.

Franchise cost. It is important to find a balance between the cost of buying a franchise and its reliability.

Franchisor support. Availability of marketing and legal support is the most important criterion.

9. Summary.

Dear readers, you have learned what a franchise is in simple terms. With all my heart I wish you to quickly move from theory to practice and start running your own business, which can be started in the following ways:

• start your business from scratch (come up with a product, service, business model)
• buy a ready-made company
• start a franchise business.

But if you do not yet have the start-up capital to buy a franchise, you can start with an online business (creating your own blog or website), which requires almost no investment. You can create and start your website in just a few days, using free instructions, including video instructions that I have prepared for you in a series of articles on my blog. Here is the link: .

See you soon on the blog pages!
I wish you all inspiration and confidence in the implementation of your projects!

I think you are already tired of this business topic and therefore I suggest you take a break and watch this rare video, how hippos saved an antelope from certain death.

Content

Starting your own business requires significant costs and carries certain risks, especially at the start. One of the safest ways to start your own business is to buy a franchise. By concluding a concession agreement, the entrepreneur receives ready-made business schemes and enlists the support of a major partner.

What is franchising

Franchising is an organization of business relations intended for opening and running a business. There is a mutually beneficial cooperation between the owner of a large brand and an entrepreneur who wants to work with an already promoted brand. The first party is called the franchisor, the second - the franchisee. The owner of the brand provides consulting, advertising support, and trains managers. The franchisee buys the right to operate under a brand name included in the catalog of offers for business. In addition, it must meet certain requirements.

Franchising - what is it? A small entrepreneur buys a set of ready-made instructions with pictures. He does not need to invent a new idea, find optimal patterns of doing business. It is already known which premises to rent, whom and how to hire as staff, how to advertise and sell goods, and provide services. If this is an online store, it is already ready to work, it has its customers. At the same time, the “big brother” is watching the conduct of the franchise business, ready, if necessary, to help with advice or deed.

Franchisor's rights

The owner of a large brand and a small firm, entering into a contract, enter into legal relations, acquire rights, and impose obligations. The franchisor can set corporate standards, control the conduct of activities, compliance with production or service standards. The owner of a large brand determines the development strategy for the entire subsidiary business. At the end of the year, the franchisor can audit the financial and accounting records of a small firm.

What is a franchisee

The system of relations provides for two cooperating parties. Who is a franchisee? This is a party to the contract who bought the opportunity to learn, receive support when opening their own business under a well-known trademark. The franchisee pays a fee at the beginning of cooperation. This is followed by monthly deductions for the use of a promoted brand, know-how, a system of work - royalties.

What is a Franchise Consultant?

Franchising - what is it? This is a deal that requires the preparation of a package of documents. The franchising consultant deals with paperwork. The cost of paperwork is a significant part of the down payment - up to 100%. The work of a consultant does not always end with the acquisition of a franchise found in the catalog. A competent specialist can further provide marketing assistance, contribute to the development of a business.

What does the word franchise mean?

The concept, translated from the French Franchise as "benefit", is used in various areas - economics, law, insurance, sports, cinema. What does franchise mean? In the field of economics and insurance, the word is used in several meanings. A franchise is, firstly, a way of organizing a small business. The second meaning of the concept is a company operating under a concession agreement. The third definition is an insurance condition under which the company gets rid of a part of possible losses.

How is a commercial concession agreement concluded?

The trademark owner grants the other party the right to use the brand, organizational support for a fee after concluding a concession agreement. The agreement is concluded between a commercial organization and a private entrepreneur for a limited or no time period. The franchise agreement is drawn up in writing and is subject to state registration.

What does a business franchise mean?

As a result of concluding a concession agreement, an individual entrepreneur acquires the right to work under the brand name, to use the support of a larger network partner. A business franchise, judging by the reviews, simplifies the organization of your business - this is the main characteristic of a concession. The owner of the brand is rewarded in the form of an initial fee paid upon entering the business. Regular payments linked to turnover may then follow. Sometimes there are no monthly transfers or an additional advertising fee is charged.

Types of franchising

Collaboration between a brand owner and a small company has features determined by the field of activity. There are four types of franchising:

Commodity franchising used in the field of trade. A small firm sells goods produced under a well-known brand. The franchise agreement clearly states the implementation technology, the assortment of the store, the rules for using the popular brand.

• Manufacturing franchising - what is it? A company that owns a patented technology for the production of goods transfers the right to produce, sell products under its own brand. In addition, the company transfers raw materials, exclusive ingredients, produced only by it using a secret technology.
• Service franchise. An individual entrepreneur acquires the right to provide certain services under a well-known brand. The franchisor provides equipment, advertising support, marketing technology. In addition, the "senior" company controls the activities of the "junior" company.
• Business franchising - what is it? An individual entrepreneur receives a license to conduct certain activities. The documents prescribe the general concept, give instructions on the training of employees, their appearance, and the design of the premises. The franchise agreement regulates the advertising policy, reporting, relationships with suppliers.

Advantages and disadvantages of a franchise

By opening a franchise enterprise, the entrepreneur invests less effort in promoting and developing the business. The organization of the enterprise is distinguished by the absence of the need for marketing research. You need to find a franchise in the catalog, study the created system well. Having taken a franchise, you do not need to look for raw materials and equipment for a long time. Information support provided by the "senior" company helps to conduct business competently. If the franchisee needs a loan, the brand owner will vouch for it.

The disadvantage of franchising is the need for initial capital. It will take a larger amount than to organize your own business on your own. Along with the right to use the mark, the reputation of the chosen brand, which is not always positive, passes to the entrepreneur. The concession agreement imposes obligations on the franchise buyer, which he must comply with any profitability of the business.

Franchising is beneficial for the brand owner in that it brings additional income. Attracting small firms from different regions to work expands the boundaries of business. Franchising provides consumers with the opportunity to learn about new products and services provided by a major brand. Minus - the impossibility of full control over the implementation of all transactions. In addition, a poorly performing “junior” company can harm the brand’s reputation and disclose trade secrets. A grown franchisee can leave the existing system of business relations and become a competitor.

Franchising industries

Franchise work is common in the following areas:

Catering. A striking example of international franchising is the McDonald's chain of cafes. Domestic mobile kiosks "Kroshka-Kartoshka", "Stop-Top" and many other brands grew up in Moscow, then rushed to the provinces.

• Software products for accounting. The undisputed leader of the industry is the franchising company "1C", which develops and sells software for enterprises.
• Provision of photographic services. Kodak has been a huge success.
• Tourism. The operating franchise networks include Well, Natalie Tours, Time Machine.

Video: what is franchising and franchise

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Hello, dear readers of the blog site. The term franchise (from franchise, in translation meaning "benefit") refers to a more complex concept - franchising.

Film franchise- very similar to the classic version, but only in relation to the media industry. A successful film appears, its characters or the world invented in it become popular, and now it is the beginning of the formation of a franchise (the Marvel universe, for example). The initial film, in fact, becomes a popular brand that can continue to be exploited mercilessly. Everyone who wishes to do this will unfasten royalties to the copyright holder (initiator).

A second film “about the same” comes out, then a third, a fourth. They are called sequels, prequels, remakes. But, in fact, these are “products” produced using proven and patented technology. They are less likely to fail at the box office, because they have behind the success of the film, the ancestor of the franchise.

Although, the ancestor can be not only a film, but also a book, as, for example, it became with the most popular Harry Potter media franchise in the world. And vice versa, a book can be written based on the film, again as a franchise. Its author will get an advantage (due to the popularity of the film), but will pay a bribe to the copyright holder. All is well (except the readers of this book 🙂).

Some terminology

This article is written in the simplest possible language, but for reasons of saving the effort and time of the author and the reader, it uses some concepts from classical economics.

Let's take a look at them:

1. Franchisor is the owner of the brand. A person (or legal entity) who, under certain conditions, transfers to other people the right to conduct activities on behalf of his company. In fact, this is the owner of the franchise.
2. - a person (or legal entity) who buys a ready-made business model and (or) brand name from the franchisor. For example, a writer (or publisher) who is writing a book about a movie will be called such a bad word.
3. - in fact, the very object of franchising. For example, a McDonald`s restaurant in Moscow. It was built for the money of a Russian investor (franchisee), but at the same time it operates under a number of strict conditions and standards.
4. Royalty, lump sum and advertising fee are the names of the investments that the franchisee makes.
   1. business entry fee.
   2. monthly payment in favor of the franchisor (right holder).
   3. Advertising fee is an annual payment in favor of brand development.
   4. In addition, there are classic investments.

Where did franchising come from

Franchising is a relatively young form of doing business. He appeared in America in 1850 after the invention of the Singer sewing machine. The novelty was so popular that the inventor simply did not have enough production capacity to provide all customers with goods. Then he sold several large factories the right to produce cars and sell them. on behalf of the Singer brand.

The method was far ahead of its time, so the next major franchises did not appear until a hundred years later. One of the first franchising companies began to practice McDonald's and Ford.

An interesting fact: what is remarkable about the franchise is that it is the brainchild of the crisis of the 1930s (the great depression in the states). To avoid bankruptcy, campaigns began to sell the right to operate on behalf of their brand. And so they survived.

The essence of the franchise business

Consider the principle of operation of this method of doing business on the example of opening a franchise of a trademark"Tasty coffee". The trademark, of course, is fictitious (and please consider all coincidences as an accident), but it is suitable for clarity of calculations. Prices are taken from a similar, real-life coffee shop chain (what is it?).

So, a franchise is a small (or large) enterprise, in which the following features appear.

Requirements for a franchisee (a person renting a business model)

Even before entering the business, the franchisee must prepare the foundation (base). In the case of our cafe, taken as an example, this is:

1. An empty space of 8 to 15 square meters in a shopping center or on the first floor of a building located on a busy street.
2. Material base (monetary foundation) - even before acquiring a franchise, the investor must provide bank statements (what if he is naked as a falcon and only puffs out his cheeks).

After the franchisor is convinced of the reliability of the future partner, the second stage of franchise development begins - making investments.

Responsibilities of the franchisor (owner of the brand, business model, technology)

The franchisor undertakes to fulfill a number of pre-agreed conditions.

Consider his actions, depending on the investments made by the participants in this scheme (junior partners, i.e. franchisees):

1. Lump sum(for entering the business under this scheme) - 100,000 rubles. Where does he go? For a hundred thousand lump-sum fee, the franchisee receives the rights to open a coffee shop under the Tasty Coffee brand, as well as instructors for staff, his own personal instructor and even a manager who will manage the entire process of preparation and opening (as well as establish ). Service, however.
2. Investment in development- 250,000 rubles. What are they spent on? Having received another two hundred and fifty thousand, the franchisor (copyright holder) begins work on the premises, namely: its overhaul, the purchase of branded equipment and bringing the design to the required standard.
3. Advertising fee- 50,000 rubles. How are these funds spent? Having collected 50 thousand rubles from each owner (purchaser) of the franchise, its owner (not himself, of course, but specially trained people) conducts an advertising campaign with this money. At the same time, not each outlet is promoted separately, but the entire brand as a whole.

It is important to understand that in this example, investments are listed separately for ease of perception. In practice, the lump-sum contribution and development investment are usually packaged in one package. Most often, the franchisor insists on the immediate start of work immediately after the transfer of the right to the brand.

Fun fact: The interesting thing about franchising is that it's a very diverse business. There are franchise-based schemes for selling flowers, making pipes, and organizing hotels. In fact, this is a model that can be pulled on any business frame (see the film industry example at the beginning of the article).

How is a franchise different from a conventional business?

Let's return to our cafe from the non-existent network "Delicious Coffee". After the completion of repair work and training of staff, the institution begins to work.

In general, this looks like a private business, but with some reservations. Let's talk about them in more detail and, for clarity, compare it all with running a regular business (for example, an individual entrepreneur).

General provisions	Differences
And here and there success depends on the amount of effort. No matter how much the franchisor helps with the business, if there is no control over personnel and equipment, the franchise will go bankrupt.	Payment of royalties, which IP does not have. Depending on the conditions of doing business, royalties range from one to five percent. For example, with a revenue of 250,000 rubles per month, royalties will be from 2,500 to 12,500 thousand.
The general system of taxation in both cases. In the CIS, franchisees and private entrepreneurs are the same in terms of taxes.	Working and closing conditions. The franchisee is not a private entrepreneur, so he must coordinate major decisions with the franchisor. More on this below.
The same principle of operation for both schemes of doing business The franchise will operate in the same way as a private establishment. Open, close, keep records. Nothing special happens.	Having a proven business model. In terms of a successful launch, a franchise is a venture with a minimum amount of risk.

So you understand, right? With the help of a franchise, you stand "under the side of the big uncle." It doesn’t blow you so much, he will support you if anything and the stability of your business is many times higher (15% of failures when working on the principle of franchising and 85% when working according to the usual scheme for the first 5 years - the statistics are harsh).

It is clear that you have to pay for such support. Love the risk - choose the usual scheme. If you prefer a tit in your hands, a franchise is a good solution (although not ideal).

Now about sad (or joyful?). The franchise can be closed both planned and unscheduled.

1. Planned franchise closure. Like any type of lease, a franchise is opened for a certain period. If, after the expiration of the contract, the parties have no claims against each other, and the franchisee has no desire to renew the contract, the scheme simply stops working.
2. unscheduled franchise closure. A franchise may be terminated early in case of bankruptcy of one of the parties or at the initiative of the franchisee. In this case, the franchisee is obliged to report the closure six months before the termination of activities. This figure is universal for all contracts.

Speaking of risks, one cannot but consider the following point.

Advantages and disadvantages of a franchise as a business model

Franchising is a direct business model that works without intermediaries (which is good), so it is advisable to consider risks and rewards for only two parties.

For the franchisor (right holder)

Advantages	Flaws
Decreased need for capital. The franchisor invests the minimum amount of money in business development.	Insecurity of intellectual property. There are cases when the franchisee, using the acquired business model, created his own brand. The franchisor is not protected from such theft by law.
Increasing the level of sales. The standard contract implies that the franchisee will purchase raw materials from the franchisor. This ensures the stable growth of the industry.	Risk of losing reputation. If the franchisee does business in bad faith, then this will affect not only his franchise, but the entire brand as a whole.
Brand development. The existence of franchises in itself is a good advertisement for the owner campaign.	Lack of complete control. By transferring the rights to conduct business to third parties, the franchisor is deprived of the opportunity to independently control the development of the business.

For the franchisee (tenant)

Advantages	Flaws
Successful start. Starting under the brand name of a well-known brand, the franchisee ensures a successful market entry by almost one hundred percent.	Lack of free access to the market for goods. The contracts clearly state the requirements for the goods. This completely eliminates the possibility of having several partners and experimenting.
Minimum promotion costs. Since the entire brand as a whole is advertised, all the work of the franchisee in this direction comes down to the annual payment of advertising fees.	The inability to directly influence the development of the brand. All global decisions regarding the further development of the brand are made exclusively by its owners.
Guaranteed supply of raw materials. The franchisor usually produces the sold goods himself, which eliminates the risks associated with working with suppliers.	Difficult exit from business. Trying to protect themselves as much as possible, franchisors include in the contract a large number of prohibitions that complicate the exit for the franchisee. For example, a ban on opening a competing business and using developments.

Interesting fact: the largest franchise company in the world is a chain of fast food restaurants Subway. It has over forty thousand franchises in the world.

Types and examples of franchising

Despite the fact that all franchising as a whole has the same concept, there are several types of this business model:

1. Commodity.
   He is also the most common. The franchisee sells the product under the brand name of the franchisor. For example, a Nike store in Kyiv or Adidas in Warsaw.
2. Industrial.
   The very first to hit the market (remember Singer). The franchisee, using the technology of the franchisor, produces the goods. For example, the Apple and Samsung factories in China, the Audi factory in Russia.
3. Service.
   It resembles a commodity one, only the franchisee sells not a product, but a service. For example, a European network of dry cleaners or a network of private music schools.
4. Back.
   The reverse can be any of the above types of franchising. Its essence is that the franchisor already pays royalties to the franchisee (in this case, 70-80 percent of the turnover).

Good luck to you! See you soon on the blog pages site

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You will learn what a franchise is, what types of franchises are, and what are the main pros and cons of starting a franchise business

Hello dear friends! In touch Alexander Berezhnov, entrepreneur and founder of the HiterBober.ru website

Today we will talk about such a thing as a franchise.

Recently, the direction of franchising is gaining immense popularity, and in my opinion, it is completely justified.

Starting your own business through the purchase of a ready-made franchise gives aspiring entrepreneurs ample opportunities. But this method also carries some dangers.

All this will be discussed in today's article.

1. What is a franchise - we give a definition

The classic wording is as follows.

Franchise is a set of benefits that allows legal entities and individuals to use the brand, author's developments, and the franchisor's business model.

There is another definition of a franchise, I formulated it myself. It is more applicable to building a business in general.

Franchise- this is a paid right to open a business under the auspices of a well-known trademark (brand), using its rules, technologies, way of doing business.

This term can be described in different ways. In my definition, I conveyed the term "franchise" in simple terms. Let's see how this model works in practice.