Like being married, franchising is about the relationship that the franchisor establishes with its franchisees. The franchisora€”provides the ita€™s franchisee partner with leadership and support and gives system guidance so that the brand is uniformly portrayed in the public eye. There are costs and fees for this for this support and guidance in the form of an initial fee and a continuing fee (a royalty) which is typically based on the gross revenues of the franchisee. When you buy a franchise, you are purchasing the time and money that Franchisors have invested into developing and supporting their systems and brands. McDonald brothers tasty staple and turned it into a billion dollar business mostly because he understood the power of a systematic approach for selling hamburgers.
Brands are psychology and science brought together to convey a uniform quality, credibility and experience. Being part of an established and well-managed franchise system can be rewarding, profitable and provide a level of safety that may not be available to non-franchised independent businesses.
Those looking for some side business ideas can read through our suggestions and perhaps they will find something they like and that they are good at; as long as you are determined and hard working nothing stands in the way of your making some extra money. Franchising is where one party (Franchisor) grants to another person (Franchisee) the right to operate the business of offering, supplying or distributing goods or services under a system or marketing plan substantially determined, controlled or suggested by the Franchisor, in return for a fee paid by the Franchisee for this service. In 1988 the Australian Government introduced the Franchising Code of Conduct as a mandatory code prescribed under the Act. A payment, either up-front or ongoing for the provision or goods or services, (except at wholesale price). Provision of a marketing plan substantially determined controlled or suggested by the franchisor (Control). A more complete explanation of these criteria can be seen in the Franchising Code of Conduct, Schedule Part 1, clause 4, Meaning of franchise agreement. Armed with this definition it is easy to see that the key components of a franchise agreement are (1) the existence of an agreement, (2) payment of money for goods or services, (3) use of the Brand name and (4) a group business system or marketing created or suggested by the franchisor. As stated above though, it is possible to create a structure for some businesses that can sit outside the ‘Code of Conduct’ thereby avoiding the issues of compliance and the vagaries of the legislation. If you have a desire or need to sit outside the ‘Code’, then your business may suit this type of derivative structure and some discussion will need to be held to explore the merits of that strategy. It must be stated however that in the vast majority of cases the long term objectives of a business are seriously compromised when the pure Business Format Franchise model is altered so as to sit outside the ‘Code’.
A business (the franchisor) licenses its business name (the brand, Hand " Stone or Meineke) and its proven operating methods (the recipe it has figured out that works) to an individual or group (the franchisee) who agrees to operate according to the terms of a contract (the franchising agreement).


Gerber also builds on the premise the entrepreneurs should not work in their business, but on it. Ita€™s role is to give you good guidance and support and keep you from getting into trouble. Not all franchisors offer financial assistance but some do have financing programs available to franchisees.
Some franchisors will help franchisees select a location for their franchise or may select the location, not allowing the franchisee to choose at all. In order to run your business the franchisor provides a detailed operations manual that includes instructions for carrying out their operating system.
Most franchisors initiate advertising efforts, either on a national or local level or both. As a franchisee, you promise to run your business in the manner that the franchisor dictates. Think of something you’re good at and figure out where you can help people, or offer them certain services, and you will have success and money. If you meet these criteria then the full effect of the ‘Code’ will apply to your activities in business through various sections of the ‘Competition and Consumer Act’. These are clearly the main strengths of franchising and the deletion of any one of them will likely effect the success of the group and its’ prospects for growth. The importance of a system is nicely articulated in The E-Myth Revisited by Michael Gerber. The benefit of the franchisor selecting the location is that they have experience choosing locations that are successful.
It establishes the rules, standards and specifications of the franchise and forces the franchisor to organize and define specific job responsibilities and tasks. These initiatives can be in the form of TV and radio commercials, direct mail campaigns and public and media relations efforts. To determine whether or not a business meets the definition of a franchise, under the ‘code’, a business must have the four definitive criteria that are summarized below. Any dilution of the use of a Common Name or Control will dilute the effectiveness of any group structure over time. The E-Myth Revisited discusses the importance of developing a system for running your business and the processes instrumental for offering your products or services to your customers with predictable results.
It has been said that people dona€™t have -relationships with products but they are loyal to brands.


Some franchisors require franchisees to pay into a fund to cover these costs or will offer a co-op arrangement where the costs are split. At the same time, the numerous choices can make that decision a challenge for even the most determined would-be franchisee. Before you can open your franchise you may need intensive training about the operating system and business as a whole. By first defining what you want and then using that information to narrow the field, you can make your decision both manageable and more likely to succeed.Start by asking yourself what kind of franchise you want to operate. Training can take place at the corporate headquarters, so you may need to factor in travel expenses, at your franchise outlet or a combination.
You will need to consider the hours you are willing to work, the kinds of work you enjoy and whether you prefer working directly with customers or remaining behind the scenes.
They identify so much with the premise of the brand that they are literally willing to brand themselves. Key factors also include how much income you need to generate and how much cash and borrowed funds you can commit to the deal.As a general rule, you will want to avoid industries and fields that are either too crowded or too thinly populated. Crowding creates competition, while the absence of franchisees in a particular niche suggests that it either doesn’t lend itself to franchising or that the market hasn’t yet developed adequately. Lenders prefer to fund franchises in proven markets, so keep that in mind as well.The franchiser should offer a well-known brand name, a track record of proven performance and a good reputation among past and present franchisees.
The franchiser should also have a detailed manual of operations to help you run the business according to tested principles but also give you enough flexibility to help you adapt to specific circumstances. This is the most important asset that a franchisor owns and the great franchisors want to ensure that their customers are satisfied each and every time they shop at a franchised location.
For a fee, the company provides franchise buyers with research and analysis on current opportunities. The company’s books include directories of new franchises, international franchises and franchises friendly to minority businesspeople. Its various Web sites hold repositories of franchise circulars, and lists of high-growth-potential franchises and large franchise systems.  Share !



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