Franchises - a Great Way to Own| Your Personal Company
24 August 2010The entrepreneurial spirit is an amazing phenomenon. It drives individuals to seek out a way to be their own boss and manage their personal organization. These people drive the engine of economic success - little companies. Unfortunately, four out of five new businesses fail within 5 years. On the other hand, 91% of new franchises are profitable.
A franchise is really a company that is owned by an individual (franchisee) but branded by a major company (franchiser). Start up costs in the United Kingdom range from £25,000 to £250,000. There are on-going managing fees too. This could be a percentage of profits or inflated expenses for supplies using the excess going to the franchiser. This fee covers marketing, training, new item development and specialized management services. The theory behind franchising would be to control costs by providing a broad spectrum of goods and/or services in the franchise headquarters. The franchisee should also remember to figure in rent and construction expenses.
The franchiser controls the supply chain, attempting to get the greatest costs for its franchisees. Occasionally this is done with national contracts and some are at the local level. In some cases the franchiser actually makes products for sale in the franchise stores.
Every franchise location is under the direct control from the franchisee. Nevertheless, when purchasing the franchise, the franchisee agrees that he will be bound by the direction of the franchiser over marketing, high quality management and great company practices. Even so, in the beginning be prepared to work long hours, have little assistance and be jack-of-all trades in your company.
There are three methods to purchase a franchise.
1, directly from a franchiser. Two, using the help of a broker. A franchise broker could be helpful in that he represents many franchisers and will assist you in selecting a franchise that meets your need. Usually, they’re paid a finders fee from the franchiser. One must be careful when using a broker that he doesn’t steer you towards the companies where his take is high. The third way would be to buy an already existing franchise. The benefits to this are you’ll have an opportunity to see the books, get an insiders understanding of how the franchise works and usually have more information to function with than having a startup. On the other hand you might or might not be able to go to training at the franchiser which is really a large deficit.
A franchise is an superb method to enter a business as it provide continuous support. Consumers are usually familiar having a the goods and service of a franchise. Franchises have a 91% achievement rate versus an independent whose five year survival rate is 20% on average. Franchising is the greatest of all worlds. You own and operate your business but have substantial assist in the franchiser.
Discover more information about Franchise Business Opportunities at Smarta
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