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What is the difference between a branch and a franchise? Ready-made business and franchise: what is the difference

In fact, there are four words with the same root that confuse aspiring entrepreneurs: franchise, franchising, franchisee and franchisor. In fact, it is not so difficult to understand the difference between them.

You just need to define the main concept, and this is franchising (one of the options entrepreneurial activity that takes place under the tutelage of a big brand or a big partner). From here comes the franchise - the object of the agreement, the franchisor - the company transferring the right to use its name, and, of course, the franchisee - the one who acquires such a right.

Franchising VS. franchise

It is wrong to talk about the difference, because it is worth noting that it, as such, does not exist. Let's look at everything from the other side: these are interconnected concepts. After all, one thing is what you are going to buy, and the second is the process of buying, in fact, a transaction.

Franchising is a form of agreement between two parties for the right to use the name of a well-known brand for their commercial purposes. Such an agreement is mutually beneficial for both parties.

For a brand it is:

Expansion of the sales network for services/products;
constant involvement of interested partners;
strengthening positions in the market;
additional profit from one-time lump sum, as well as monthly deductions (royalties);
minimum intervention.

For the buyer it is:

Obtaining a proven, well-developed and debugged business model;
free education;
regular consultations;
marketing support;
minimum spending on advertising;
big profit immediately, thanks to the well-known name.

The object of the agreement, i.e. franchise includes not only the right to use a big name or trademark but also on the use of the developed business model. The package includes manufacturing technologies for a particular product, software, corporate symbols, unique equipment, etc.

In general, a novice entrepreneur pays for a set of developments that he cannot do without, and which, moreover, minimize all risks. Among the obvious advantages of the franchise, it is also worth noting the feeling of support, since the brand itself is interested in improving the image. Most companies are ready to provide assistance to subsidiaries at all stages of work and development (advice, training, consultations, training right decisions etc.).

When you have the necessary amount or you can afford a loan, you simply choose the most interesting and profitable industry for you and apply for signing an agreement. If you meet the requirements of the franchisor, you will definitely be selected.

Requirements and conditions can be very different, depending on the type of brand activity. When reviewing a contract, you can make adjustments and suggestions in 90% of cases. If you choose a global brand (Starbucks, etc.), only the brand will dictate the terms. You either agree or you don't.

What is direct franchising?

This is a scheme for selling a franchise to a private entrepreneur, which involves very close cooperation. This option allows an individual to become an entrepreneur very quickly, if he has the necessary funds.

If the buyer chooses a foreign brand, he may encounter problems in providing support, as it is not very easy to establish a business due to the long distance. At the same time, the franchisor cannot always correctly assess the working conditions in another country.

As practice shows, for such cases only the largest companies with financial potential are used to study the opportunities and prospects of the local market. The owner can sell only one franchise and control the activities of the new partner.

So, such a scheme will be simple only if you choose a Russian brand, or one that has opened many representative offices in your country / a particular region.

Now that you are familiar with the terminology, you can explore the supply market, evaluate your chances and opportunities, and try to realize your strength in a new direction with the help of a franchise.

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100 days without interest on the loan;
Limit credit up to 500,000 rubles;
Interest rate from 14.99%;
The cost of annual maintenance is from 1190 rubles;
Free replenishment and cash withdrawal;
Free internet banking;
Free mobile banking.

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55 days without interest on the loan;
Interest rate from 12%;
Installment plan at 0% up to 12 months;
The cost of annual maintenance is from 590 rubles;
Minimum payment up to 8%;
Free replenishment of the card;
Bonus points for spending on the card;
Free internet banking;
Free mobile banking.

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56 days No interest on the loan;
Limit credit up to 300,000 rubles;
Interest rate from 11.5%;
Issuance of a passport in 5 minutes;
Free internet banking;
Free mobile banking.

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52 days without interest on the loan;
Limit credit up to 600,000 rubles;
Interest rate from 28%;
The cost of annual maintenance is free;
Cashback 5%;
Free internet banking;
Free mobile banking.

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Both options for starting your own business can save you time and money. However, there are fundamental differences between them. Let's figure out which ones.

Ready-made business and franchise as tools for starting a business

Choose the right business creation tool based on your capabilities and goals. Let's take a closer look at each of them.

What gives a ready-made business

An operating business is, first of all, the assets that you buy. For example: premises, equipment, accumulated client base. In essence, you get the basis for creating own business. The success of the project and profit depends on how you use it.

Who is a ready-made business suitable for?

This is a good option for those who know how to properly use the received assets. Understands the specifics of the business, has managerial experience and wants to pass the difficult and long period of the formation of the business. With the right approach, even a loss-making project acquired at minimum cost can generate income.

What are the characteristics of a franchise

franchise gives the right to work under a well-known brand. You become part of a single network and get:

Instructions for starting and running a business
Advertising within the network
Support of specialists of the main company

Each franchisor provides partners with a certain amount of support. It determines the cost of the franchise and the conditions for paying the lump-sum fee and royalties. Some companies offer turnkey franchise opening: from choosing a business premises to setting up advertising and starting a business. Others are just marketing and a franchisee book - a guide to doing business. A franchise may have several packages that differ in cost and range of services for the franchisee.

Who is eligible for the franchise?

You have little experience in business and rely on support from an experienced company.
You are ready to work according to the already formed network concept and under a recognizable brand.

With all the advantages of a franchise, your project is part of existing organization. So, you must share the principles of the network. Freedom of the franchisee is limited. He cannot, at his own discretion, change the concept of activity and introduce new ideas.

Which is better: buy a ready-made business or a franchise

Investment in an existing project or franchise does not guarantee you success and high profits. However, these tools help to significantly reduce the risks compared to starting your own business from scratch.

Ready business gives you freedom and independence, the opportunity to realize your ideas. At the same time, using the assets formed by the first owner, you will ensure a quick start and lower project costs. However, there is always a risk of making a mistake and losing your money.

Franchising is a chance to work under a well-known brand using proven schemes. He is provided with assistance and support from the franchisor. But he is limited in the possibility of realizing his own ideas.

IN modern society the number of people with business acumen, who are able to achieve high results in work due to their diligence and perseverance, but who are completely devoid of ideas for creating a business, prevails.

It was for such representatives of society that the first franchise was once launched and a worldwide network was developed, allowing millions of people who want to start their business NOT from scratch.

Let's get into the definitions!

With all the innovations introduced, many understandable and not very definitions have entered our lives.

And not everyone can figure it out on their own. For example, what is the difference between Franchise and Franchise?

To begin with, let's look at the most popular foreign expressions that have come into our lives with this type of business:

Franchising - this is a way of organizing business in which a large and successful company announces a “set” of potential partners who are ready to act under its brand and on its behalf, act according to established rules and pay a certain fee (royalties) for using this brand.
Franchise - it is a “package” of intellectual and tangible property transferred by the franchise owner to a newly minted partner. Based on the materials and knowledge received, the entrepreneur must establish a partner company and develop it under the strict supervision of curators from the parent organization.
Franchisor is a company that owns a franchise, distributes it and owns the rights to the brand.
Franchisees - this entity who bought the rights to a franchise (franchising package) and operates within it.

Thus, from the above definitions, we can conclude that franchising and franchise are related concepts which should not be confused.

After all, franchising is the process itself or a type of interaction between two legal entities, such as a concession. A franchise is an offer or a package purchased on the basis of a franchise agreement.

By understanding the difference, you will take the first step towards the successful development of your own franchisee firm.

Pros and cons of franchising

The second point in our review will be the advantages and disadvantages of this type of cooperation as franchising. Learn how to choose according to individual criteria.

Positive sides:

by purchasing a franchise, an entrepreneur receives a fully tested and proven business project;
the brand under which the partner legal entity acts is already known to a wide range of people and has its own loyal target audience. It will not have to be advertised and "sold" to the public, to earn its trust;
employees of the parent company have already gone through all the difficulties of the stage of starting a business. So you will have reliable “guides” and many real running projects from which you can learn from experience.

As for the negatives:

Rigid business rules- under the franchise agreement, the franchisee company does not have the right to develop its own business strategies and apply business practices that are not specified by the policy of the parent organization. Violation this rule threatens you with large fines and termination of the contract (as the maximum punishment).
The focus is not on you- this means that all the merits of your partner company will in any case be attributed to the entire brand and the franchisor itself, as a result.

So, in this case, "a medal of two sides" - you can and should work well, but you will not be able to get all the "fruits" of your efforts.

Features of the franchise

One successful businessman said, “Franchising is the enemy of creative thinking. Yes, and thinking in principle. This means that the entrepreneur, over time, weaned to think independently and look for original ways to solve problems.

He just goes on the beaten path, and this kills creativity. And "business sharks" are getting smaller and smaller.

Therefore, whether to choose this way of cooperation is up to you. If you are accustomed to and like to follow strict regulations, show high results within them.

If you prefer not to take risks, but to act according to proven schemes.

If your experience tells you that you cannot or do not want to create anything fundamentally new, then this business is for you.

Choose your franchise carefully commensurate your financial opportunities with existing risks. Make sure that the business offered to you will be really in demand in the chosen region, and the competition will not stifle the start-up business. Learn more about this and other issues in the following video:

Weigh the pros and cons and make an informed decision! Only in this case, success awaits you, and franchising will prove its effectiveness!

Many modern businessmen decide to start their business not from scratch, but using the useful developments of other well-known companies. This process is well known in developed countries peace. At the same time, companies that use other people's trademarks, know-how, business models, as well as their main owners, benefit. Nevertheless, in this situation, many entrepreneurs have a completely logical question: what is the difference between a franchise and franchising? This will be discussed below.

What is a franchise?

Translated from French, the term "franchise" can be interpreted as "benefit". In reality, this concept means a set of documents that allow a small, most often start-up company to use certain elements. successful business, supervised by a large promoted company, namely:

brands, logos and trademarks;
software development;
managerial, technological and commercial processes, etc.

A franchise can be thought of as a rental of useful developments or reputation. This way of doing business allows novice businessmen to quickly succeed in the market through the use of brands and know-how of major players in the economy. It is quite obvious that such an event costs a young company a certain amount.

The franchise price consists of two main elements, including:

Lump sum - a one-time payment that a novice entrepreneur provides to the owner or software to obtain permission to use it;
Royalties are part of the profits received from the use of a franchise, which may be in the form of a fixed payment or percentage.

The use of a franchise provides for the observance of certain conditions by its recipient, in particular:

Produce goods or provide services in strict accordance with those quality standards that are approved at the level of the main company;
Put on the product the trademark of the owner company;
Allow the franchisee to carry out regular checks regarding the use of know-how or trademark;
Do not transfer the right to use the franchise to third parties.

Thus, a franchise is a direct and legal right to use other people's developments in business to achieve success in the market.

The content of franchising and its main advantages

If a franchise is the right to use useful developments, then franchising is the process of buying this right and forming an agreement between the parties.

The subjects of franchising are two parties, without which it is impossible:

Franchisor - franchise seller - a large firm that has a well-known trademark, good reputation or other useful intangible assets that can be useful in promoting the market;
The franchisee - the buyer of the franchise - is a small young company that wants to get the right to use useful developments in its activities for a certain time.

The object of the agreement between the franchisor and the franchisee is the franchise. The parties enter into an agreement for a certain period and the buyer pays the seller.

It is advisable to pay attention to the benefits that franchising provides to a start-up business:

Providing recognition. The franchise buyer enters the market under a brand name already known to buyers, which allows him to avoid huge marketing costs;
Risk reduction. Typically, franchisees not only sell the right to use it, but also support start-up franchisees, as the latter, in fact, become part of their network.
Useful experience. A new entrepreneur can start a business in a particular industry with franchising, and a little later - after gaining useful experience, start operating on the market independently.

Of course, the cost of a franchise is quite high, and its use is fraught with the implementation of activities within narrow, predetermined limits. Nevertheless, this guarantees business stability, the possibility of making a profit already at the first stages of activity, as well as some protection from risks.

Thus, the main difference between the two interrelated concepts is that a franchise is a right, while franchising is a process of its legal use. The franchising mechanism is an effective platform for starting a start-up business, which is based on the achievements of large companies.

Hello! From this article you will learn:

What is a franchise in simple words;
How to open a franchise business;
Common types of franchises and how they work;
Pros and cons of franchising.

And much more related to franchising in Russia.

What is a franchise

Aspiring entrepreneurs face difficulties and problems that can lead to the collapse of an idea. good option becomes a franchise cooperation with successful company. This type of business is most in demand in developed countries, where it accounts for 30% of all operating establishments in the service and trade sectors.

The term means a special kind business relations between an entrepreneur and a company that has successfully taken place and has a brand.

In simple words "franchise" is a long-term lease of a business project on the terms of the trademark owner.

A special agreement provides for a whole range of services that greatly facilitates the start and allows you to use:

The name of the brand and attributes;
General working style;
Branded recipes or formulations;
Technologies of work and service.

This system of doing business is rapidly developing and domestic market goods and services. If on independent creation project and bringing it to a stable result takes more than one year, work on a franchise can give a good profit in six months.

The difference between franchising and franchising

These two terms are actively used in the designation of such transactions.

An entrepreneur should understand the difference and correctly operate with them:

Franchise denotes what is bought on a long-term lease (rights, prescriptions, equipment, etc.);
Franchising– the process of acquiring a long-term lease.

The latter is a way of doing business, which involves the purchase of a brand or production technology, staff training and the creation of a branch of a well-known brand. The term "franchising package" is often used. It combines documentation, manuals and materials belonging to the company.

How does a franchise work

Before understanding what a franchise is and how it works, you need to get acquainted with the basic terms and names.

There are two parties involved in organizing a business project:

Brand owner directly franchisor): sells a license, allowing you to work on your behalf under certain conditions;
Buyer ( franchisees): uses the acquired potential in the working process, transferring a part of the income determined by the agreement to the franchisor.

The franchise is completely ready plan and a business project management model, so the future entrepreneur does not need to spend time on solving organizational issues. Despite the cost, this option is beneficial for both parties. The new owner receives support and support, and starts working without a huge initial capital, leaving himself about 90% of the profit in the first month.

The brand receives a stable profit in the form of:

Lump sum, which is paid once after the signing of the contract. This amount gives the right to open a business project under the sign of a famous brand. It includes all costs for launching, designing and equipping a new enterprise (rent, development of a marketing and advertising strategy, staff training);
Royalty as a percentage of total turnover. In most cases, payment is made monthly to the franchisor's account and amounts to approximately 5-10% of the profit received. This is a kind of replacement rent. In the commodity form of franchising, a royalty is a regular purchase of goods for a certain amount.

Royalties are the main source of income for many franchisors involved in trading activities or providing services.

The contract specifies one of the payment options:

Percentage of product sales;
A fixed amount that is paid annually (or quarterly);
The trade margin on branded goods, the sale of which is carried out by the franchisee.

A low percentage of mandatory payments at the level of 10% is an acceptable amount even for a novice entrepreneur. The popularity of a trademark helps it to attract a large number of customers, recoup investments with minimal risk. Such a transaction is beneficial for a franchisor company not only by the return of stable profits without preliminary investments. It allows you to expand and advance in the market, to receive high incomes.

There are two main types of systems that are found on the market:

Merchandise Franchising: store chains are being created different type on sale industrial products or food. The franchisor himself is often the supplier of these goods;
Service Franchising: a network of training centers is developing, which train specialists for new branches, provide equipment and control.

Such types of work were chosen by well-known companies McDonald's, Lukoil and Zara, commercial network"Crossroad" and mobile operator Beeline. Economists identify at least 70 interesting areas where the franchise is relevant and in demand.

The first places in such a list are occupied by:

Production of popular foods and drinks (snacks, chips or beer);
Supermarkets of various types (food, Construction Materials or gardening)
Gyms and health centers, beauty or massage salons;
Public catering (from fast food eateries to reputable restaurants);
Pawnshops and organizations providing quick microloans;
Sale sports nutrition, oxygen cocktails;
Construction and repair services;
Store branches household appliances or decor;
Representation of well-known online stores.

The most promising areas are considered to be those related to servicing the population and providing various services. They show high sales turnover, so the franchisor will quickly and consistently receive decent royalties.

Types of franchises

There are several types of franchises that differ in terms of cooperation and interest rates for using the brand:

Free- the most popular option that gives great opportunities to the entrepreneur. It allows you to make innovations and features in project management. This type is characterized by affordable monthly interest, the ability to use a trademark, interesting free master classes and other privileges. It is more like a dealership than others.
classical- provides for a standard approach in the form of a lump-sum contribution, compliance with all rules for the provision of services on behalf of the brand, periodic activity reports to the main office. Clear conditions and strict limits distinguish foreign franchise companies.
Business for rent- a franchise entrepreneur receives a business project for management for a certain period. During this period, all income is distributed in the agreed proportion.
Golden- This is an option for experienced businessmen, which allows you to purchase from the franchisor the right to be the sole representative of his brand in the region. With a high cost of a lump-sum contribution, the entrepreneur receives broad rights and opportunities for project management. They even extend to the possibility of selling a franchise to other businessmen.
Silver- the most convenient form of franchise. The company is completely turnkey, independently looking for a place to rent, personnel, and solves organizational issues. It is transferred to the franchisee on a monthly interest basis, and the company is removed from management.
Corporate– the agreement provides that almost all actions of an entrepreneur who has acquired a franchise are regulated and controlled famous company. He plays more of a managerial role.
Import-substituting view- involves the production of high-quality products, similar to branded ones, but under its own name. This makes it possible to preserve technology and originality while working with ready recipes or instructions.

The latter has recently appeared on the domestic market, but is actively promoted by foreign companies producing food, cosmetics and detergents.

Franchise cost

When choosing a franchise for many entrepreneurs, the main issue is cost. It directly depends on the fame and popularity of the trademark, the position of the company in the market of goods and services.

An important component is the list of services and equipment that will be available after making the first installment. The average size deductible ranges widely from $1,000 to $100,000.

The most loyal conditions for a lump sum are offered by supermarket chains, chains of small eateries or cafeterias. Given the economic hardship for SMEs, many have canceled the initial payment. This attracts potential franchisees on favorable terms.

The second important issue is regular royalty payments. Almost always, they are prescribed in the contract not in a fixed amount, but as a percentage of turnover or profit. Most networks fast food, grocery supermarkets is limited to 2-5%. Narrowly focused companies or broadly famous brands may require 10-12% for work under their own name.

Some entrepreneurs do not have the financial means to buy a franchise package, but they have organizational skills and a desire to develop their own business.

In this case, the exit will be a franchise without investments, which can be obtained in one of the difficult ways:

Find a network with a missing or formal lump-sum fee;
Submit an original business plan and try to get a small initial investment from the franchisor;
Look for interested third-party investors on favorable terms.

A common option is when the network provides franchises to its current employees on the most convenient terms. These are talented managers or heads of departments who have the opportunity and desire to become a co-owner of a new branch or outlet.

The benefits of franchising

The number of enterprises that are actively working under a foreign brand has exceeded 10,000 projects.

Each of them appreciated the obvious benefits of cooperation:

Low risk. Entrepreneurs with little experience in financial affairs receive support and advice from the first minutes of work. Many franchisors accompany partners throughout the entire term of the contract, teach new techniques and technologies.
recognizable brand name. It is easier for a novice businessman to settle in the market "under the wing" of a brand with a good recommendation. The product or service is already known to customers, is in demand and will quickly bring the first income.
Saving time for project promotion. Most businesses take at least 2 years to build their own brand and get their money back. A franchise project can reach self-sufficiency in 5-6 months.
Professional Support. Large companies seriously approach the preparation of future franchisees. For them, training programs and courses are held on the topic of production, doing business and customer service. Personnel who will work on the basis of franchising technology are trained free of charge. Most brands are ready to provide legal assistance at any stage and provide access to useful information.
Minimum advertising spend. Companies with a recognizable trademark constantly hold large advertising campaigns. Therefore, franchisees may be limited inexpensive advertising in local media and in social networks at the level of your region.

The main advantage for a franchise company is the guaranteed sale of a certain volume of products. Brand owners can plan the pace of production and work, future costs and develop new products.

Franchise Disadvantages

Every trade has its downsides. There are also a number of shortcomings in the work on the franchising system, which the entrepreneur must remember before the final signing of the contract.

List of disadvantages:

Strict framework. All actions and decisions of the franchisee are regulated by the cooperation agreement with the brand. He has no right to violate the technology of production or provision of services. Restrictions may relate to the design and location of the premises, its area and the number of staff.
Inability to choose equipment or raw materials. In addition to monthly interest payments, the contract specifies the conditions and volumes of purchases of materials only from the franchisor. This limits in technical development and improvement.
High price for profitable franchises. Many projects have a large lump-sum contribution and are beyond the means of talented entrepreneurs. The cost can exceed $50,000 with small regular payments. This is typical for foreign companies that invest heavily in advertising and development of their own technologies.
Control by the franchisor. It is not always comfortable and easy for aspiring entrepreneurs to work under the close supervision of a brand. This includes regular reporting to different form. All options and terms are specified in the contract, so you should weigh the possibilities of such close cooperation. It is better to choose a more obscure project that will give freedom of action and bring pleasure from work.
Limitations in self-expression. Strict technology compliance requirements may include certain promotions, pace of development and expansion. Big choice marketing tools happens to buyers of a free type of franchise. In this case, the company practically does not interfere with the principles of franchisee management.

Among other disadvantages that accompany the work, experienced managers highlight the fast pace of work. The company provides a clear regulated plan for the next 2-3 years, which does not allow you to relax or retreat. All products or services must strictly comply with the franchisor's regulations, and any violation leads to the revocation of the license and termination of cooperation.

How to buy a franchise - the main stages

After assessing all the risks and prospects, you can start looking for the best offer. Running a franchise business comes with certain responsibilities and restrictions. Therefore, a quick return on investment and the profitability of the project largely depend on the capabilities of the franchisor.

Important! You can find a franchise in our. It contains the most reliable franchisor companies that have long established themselves in the market!

The choice of a future partner should be considered carefully at each stage of the transaction:

Market analysis and selection of a promising direction activities. Each area has certain problems and shortcomings. Profitability depends on many factors, including the location of the office or outlet, the number and level of training of staff.
Search for the optimal franchise in catalogs and websites, careful study of each proposal.
Introduction to the franchise company, working conditions and requirements for applicants. Reputable brands are willing to make contact and are ready to provide maximum information.
Communication with established franchisees who can provide guidance, advice, or highlight controversial business issues.
Getting advice from a franchising specialist. It can be found in a consulting or legal form. He will help you understand the contract, show hidden opportunities and "pitfalls" of a business project. The lawyer will study the proposed documents, check the correctness of registration of trademarks and licenses.
Assessment of own financial capabilities. In addition to the down payment, investments in the design and rental of premises, hiring staff, paperwork and seals may be required.

The final stage will be the conclusion of a franchise agreement with the selected partner, the signing of contracts and fruitful cooperation. Experienced franchisees strongly recommend that novice entrepreneurs consult with lawyers at all stages and analyze each step.

Requirements for a potential franchisee

The financial crisis has forced companies to reconsider their selection of candidates for cooperation. The main criterion is the financial capabilities of the franchisee. In addition to the lump-sum contribution, decent expenses will require rent and equipment of the premises, the purchase of the first batches of goods or raw materials.

Franchisors indicate the minimum starting amount that a potential candidate should have:

McDonald's network - more than 1 million rubles;
Clothing brand Zara - 1.2 million rubles;
LLC "Burger King" - more than 2 million rubles;
Coffee Woods coffee houses - from 200 thousand rubles.

When interviewing representatives of a franchise company, the following points are of interest:

Experience in a managerial position, ability to lead a team and make decisions;
Knowledge or skills in the chosen field of activity;
Availability of space for production facilities, a restaurant or workshop;
Psychological stability and the ability to work with limitations, under control.

The main problems for partners arise with a different approach to doing business and solving difficult situations. Therefore, foreign companies often conduct special testing and surveys. It helps to assess the potential and stress resistance, the ability to maintain the corporate spirit. Domestic companies give preference to work experience and financial stability.

Features and content of the franchise agreement

After choosing what to open under a franchise, the conclusion of an agreement is an important component that determines the norms and rules of cooperation between the parties. Therefore, do not neglect the advice of a lawyer, the study of each item.

A franchise agreement (commercial concession or license) must be concluded in writing. The validity period in this type of relationship is not a mandatory part of the document and can reach 50 years.

Franchise or commercial concession agreement signed between the franchisor and the franchisee. The first is indicated as the right holder transferring certain rights for use. The second party is a natural or legal person.

The subject of a commercial concession agreement may be: a company's trademark, production technologies or know-how. Be sure to specify the volume and terms of submission. The document details the method and amount of payment of the lump-sum contribution, as well as royalties. By agreement of the parties, these points can be indicated in percentages or in specific numerical terms.

Sometimes a subconcession clause is specified in the contract. It means that, under certain conditions, the franchisee can transfer the rights to a third party to carry out entrepreneurial activities. The parties may also indicate other situations that can lead to a change in conditions: the unprofitability of an open business project, changes in the composition of the management and other circumstances.

Rights and obligations of the parties

The franchise agreement is primarily aimed at securing the rights of the parties and the designation of their obligations.

The franchisor is required by law to:

Transfer to the partner in full the documents and equipment that is necessary for doing business;
Guarantee and ensure the uninterrupted supply of goods or components of proper quality;
Train staff in the technology of the work process;
Provide franchisees with full comprehensive advice on all issues related to working moments.

The brand reserves the right to control the activities of the branch, the quality of its products or the provision of mass services to them.

The agreement provides for the following rights and obligations of the franchisee:

The use of the trademark and all technological capacities only in accordance with the rules of the document;
Provide high quality products manufactured under this mark;
Comply with all the rules for using branded equipment, do not change the technology and recipe;
Do not declassify technologies and professional know-how;
Participate in the financing of the advertising fund, support promotions on behalf of the brand.

The contract may contain other clauses and sections that regulate relations between the parties and make their work comfortable. They depend on the type of franchise, type of activity and other indirect factors. The document should not restrict the rights of the franchisee, especially in the area of pricing and project management. It is subject to mandatory state registration.

The conclusion of a franchise agreement gives the entrepreneur the opportunity to open a profitable project under the authority of a serious brand. In order for cooperation to become profitable and full, it is necessary to register all the exciting moments and nuances, discuss them with an experienced lawyer.

Experts consider the problem of keeping technologies and recipes secret, as well as the negative in the case of franchisees, among the disadvantages of the agreement. A serious problem is the success of a branch that leaves the brand network and becomes a competitor in the industry.

Contents of the franchise package

After the conclusion of the contract, the company provides the new partner with a franchise package, the contents of which are covered by a lump-sum fee:

The possibility of using a well-known trademark in the production process;
Developed instructions and recommendations for corporate identity, design and packaging;
Developments by organizational structure: training and motivation of personnel, creation of conditions for work and development, job descriptions;
Information about the product and raw materials, including certificates, norms and technologies;
A complete list of trading partners and wholesale purchase centers with coordinates;
Instructions for launching and maintaining a business project;
Requirements and recommendations on pricing policy;
Transport schemes.

Franchising packages of each brand may vary, so it is better to specify the exact list of services and documents individually. For small cafes or shops, dishes or packaging materials with a logo, uniforms and room design can be added. In practice, an entrepreneur must receive all the conditions for doing business.

Famous companies include in the package ongoing legal and marketing support, advisory services and retraining of personnel on different stages. They provide support for registration in government bodies, health checks and reporting. This helps the branch to maintain momentum and develop actively.

Popular examples of franchising

Several hundred companies are actively working on the domestic market, which are constantly expanding their network through franchising.

Based on many parameters and tempo economic growth, you can make a certain rating of brands offering a ready-made franchise business:

"Fix Price" - a chain of stores where goods are available at one price, already has 2050 outlets;
Pyaterochka is a retail chain with 6,200 supermarkets throughout the country;
Operator "Tele2" - a provider of communications and the Internet with 3,100 franchisees at the end of last year;
The KFC network - with the high costs of launching a new cafe, 30,000 outlets are already operating;
"33 Penguins" - a company that opens an ice cream parlor and is aimed at visitors of different ages (1312 establishments);
"Invitro" - independent laboratories offering a wide range of analyzes at an affordable price (more than 700 departments);
"Sportmaster" - favorite stores of fans of an active lifestyle offer excellent conditions for cooperation;
"Orange Elephant" - the most profitable children's franchise of 2015 quickly pays off and opened 360 branches in 9 years;
Askona is a furniture factory whose products can be purchased at 600 points.

Among fast food and fast food chains, the proposal to open a franchise business can be discussed with representatives of:

McDonald's - the most famous franchise requires a serious approach and large initial investments from applicants (more than 36 thousand establishments in the world);
"SUBWAY" - a fast food chain with the largest franchise and 43 thousand cafes in many countries;
Russian "Stardogs" - with affordable conditions for small businesses.

All these franchises are in our franchise directory!

Entrepreneurs who are interested in a franchise without investment are offered cooperation by small companies. They provide comprehensive services or retail goods: souvenir brand "Present Day", toy store "Your Bear" or transport company"Your Ticket" Their conditions and the cost of royalties are within the power of entrepreneurs who do not want to take loans or loans.

How to choose a franchise

Before purchasing a franchise, it is necessary to carefully study the demand in the region, assess the purchasing interest and solvency. It will be right to consider all the indicators in the future, so as not to crash after a few years of work.

An important issue is the reliability and popularity of the franchise partner. Good companies offer not only trademark and equipment, but also constant training, consultations and loyal financial conditions. The most comfortable will be cooperation with minimal intervention and control of work from the network.

Is it possible to work with several franchises at the same time

Until the last wave of the economic crisis, most established brands did not give entrepreneurs the opportunity to manage multiple business projects at once. It was believed that the franchisee will not be able to control and develop them successfully, will lead to bankruptcy. A significant slowdown in economic growth has led to the development of multifunctional franchising. Many companies began to cooperate with successful entrepreneurs who had experience in this system in other areas.

Experts recommend that one businessman work with no more than two franchisors at the same time. Proceed to the next case after establishing stable operation of the first branch. The option is more suitable for active and creative people who have free time and a team of like-minded people.

Can I get a loan for a franchise?

Such projects are approved by banks due to the presence of a well-defined business plan and economic strategy. Compared to self-employed businesses, franchisees close only 15% of the time. Therefore, banks are increasingly developing special programs adapted for this type of business.

Is it worth it to cooperate with a brand that has few representatives

The domestic franchising market is in search of new directions. Some companies do not have permanent offices in a number of regions. Therefore, buying a franchise from such a brand will bring a bonus in the form of a small number of competitors and sub-franchising in the future. New little-known brands can offer great conditions and minimal royalties to grow and gain momentum faster.