Franchising these days is one of the most popular business ideas. It is a kind of legal contract between two entities, regulating their mutual rights and obligations. To put it more clearly, the person who accepts the contract, i.e. the franchisee, has his own business, which he decides to run under the banner of the network, owned by the franchisor. In this article we will try to give you an idea of opportunities of franchising and the possibilities and prognosis for starting such a business for two parties and also show you all the franchise opportunities and the most profitable franchises.
Who is franchisee?
Just as we managed to mention above, a franchisee is called a person who decides to reorganize his business under the banner of another, recognizable company, generating more profits and taking some of the responsibilities away from himself, such as brand promotion.
Franchisee vs franchisor
Let's stop for a moment at the responsibilities of these two parties:
- Franchisor - we can call it the party that has already built a certain foundation in business, intends to go a step further and expand beyond its region where it all started. Then the real work begins. On the shoulders of the franchisors rests the entire organization of the network, responsibilities, frequent trips associated with the opening of a new point, an outlet.
- Franchisee - an individual who has decided to do his business, but under the wings of a larger company. He is obliged to organize the outlet according to the imposed order, meet the requirements and fulfill the company's goals.
How to start from scratch?
Again, we will break down this question into two sides.
A person who intends to start creating a business that has the opportunity and potential to expand beyond a particular region decides to decentralize his operations. Then the idea of franchising comes to mind. It's a fact, it's a huge responsibility to be the head of the company, to make given actions and decisions, but it's definitely easier when in the field our units being limited by contracts and acting in the name of the company, make their own decisions and solve small poodle issues on the spot. We start with small steps, first trying to extend our business to our own region, and when it gains a certain reputation, try to break through further. It is important to find entrepreneurs who are willing to start working together.
A person who is interested in taking on a franchise begins by initially estimating the profits that the business will be able to bring in. He also analyzes the contract, since the franchisor usually presents the contract in the same form for each contractor. However, it is important to superimpose the content of the contract on our capabilities and circumstances. After all, any contract can be negotiated to make it as favorable to us as possible. It’s something similar to buy a business!
It is important to request a business model from the franchisor, proven for a minimum of 12 months. What does this give you? A great deal. You can then estimate the initial risk you are signing up for, get an idea of how revenue looks relative to the season, and how much flexibility the company has to fit into current market trends.
Franchise for sale?
This question is actually funny, but if you want to buy a franchise or just start a business, check out websites of companies. There is usually a tab for cooperation or contact information, initial franchise rules. After that, just call the number provided, contact by email, or write a request for someone to get back to you.
What is the most profitable in 2024?
Did you know that even your favorite McDonald’s is a franchise company? Now you probably wonder what is the best franchise to own. In fact, what is most cost-effective is a relative term. It all depends on location, opportunity, region and its trends. Nevertheless, fast food, markets and hotels are the most popular. International giants mentioned in many franchise rankings include McDonald's, KFC, Marriott International, Pizza Hut Burger King, Domino's, Dunkin', SUBWAY, Circle K, InterContinental Hotels and Resorts, Taco Bell, Hilton Hotels & Resorts, 7-Eleven, among others. These are the top franchises. Most of them are food franchises. As you can see, it's likely that if it weren't for franchise agreements and the popularization of this kind of business, we wouldn't be able to eat 2forU in any global location. If we want to find cheap franchises to start, it would be any grocery store, like international 7-eleven.
Do you have any choice?
The choice of what you want to do and what business you want to run is, of course, up to you, your needs and capabilities. Of course, you know the benefits of franchising: expanding your distribution channels, strengthening your position in the market, increasing your name and brand awareness without the cost of further investment and business risk (after all, even the best idea placed in an identical business environment doesn't necessarily work out). Remember one important thing. In franchising, you do not remain alone. The franchisor bears the main risk, failure, and it is on him to come up with solutions and implement them.
What are the benefits of running a franchise?
Undoubtedly, these benefits can be listed. We are talking here, of course, about people who decide to be a franchisee. First of all, among the biggest advantages we can include the use of reputation, resources and a proven business model that has been implemented by the franchisor for years. So we have the side of starting from scratch and the marketing side out of the way. In addition, the franchisor usually offers us ongoing development opportunities, such as continuing education courses, that we can take advantage of. Even if things don't work out for us one day with the franchise, the knowledge we've acquired can't be taken away from us by anyone. With this also comes help from the franchisor, which we can count on, most often included in the contract.
What are the disadvantages?
This is also worth mentioning. The franchisee must expect constant supervision from the franchisor, which also prevents him from shaping his brand on his own. In addition, any profits are taken by the franchisor. We also have to reckon with the risk, if our revenues are not satisfactory, the contract may not be renewed. In fact, trying in a franchise without a certain amount of start-up capital can cause us problems and make us look for the most profitable franchise but cheap one. You see, it’s a difference between opening a 7-eleven store, than a gas station.
Is it possible to make a good profit on this?
For the franchisor
If our brand gains reputation, we are able to spread it beyond our region, we think the answer is obvious. It is a sure payback for years of hard pract, putting capital into marketing. The franchisee is contractually bound to give back most of the profits, in case of insubordination we are able to not renew the contract and look for another person willing to do this kind of cooperation.
For the franchisee
All costs with regard to marketing fall away from us, we are actually working on someone else's success. Despite the stipulations in the contract regarding giving a part of the profits to the franchisor, all the time the money we are left with is not small, we work most often on the backs of giants like McDonald's, 7eleven. Everyone, even from another country, knows our brand, and will have no resistance to enter a unit they know. Usually in this type of business, you can find the cheapest franchises to start, like we mentioned above. In conclusion, in 2022 franchising is something to be interested in to start a successful business further than our region or, on the other hand, if you dream of a quiet business with an initial reputation.
