Franchising is the easiest way to invest in well established business. It will not require a brain racking sessions to think how to start a new business.
If you are confused regarding how and where should you invest money, you can opt for franchising. Entering in to franchising business is good for those who do not have patience. In this type of business you do not have to wait to see the product or service reaching the peak. You can just enter a business which is already at the peak stage of its life cycle. Franchising gives you full opportunity to shake hands with the full fledged businessmen.
To run a successful business it is not necessary that you should come from a business oriented family. If you have good entrepreneurial skills nothing is safer than franchising to experiment with. Franchising is a type of business which is beneficial for both franchisor and franchisee. Read on find how you can enter in business through franchising.
Parties involved in franchising
The parties involved in franchising are franchisor and franchisee. Franchisor is a person who has an existing business and wants to expand or diversify it. Franchisee is a person who wants to invest his capital in the existing business of franchisor. The entire concept of franchising is based on the mutual understanding between franchisor and franchisee.
What is franchising?
Franchising is a deal between a franchisor and franchisee. Here franchisor agrees to share his trade marks, copy rights, technological know how, with franchisee. In return of which the franchisee has to pay a fixed amount of royalty to the franchisor. Franchising can involve following three types.
Manufacturing
It is type of franchising where a franchisor shares the manufacturing process with franchisee. The franchisee gets the rights to manufacture the franchisor's products. In this case the franchisor allows using his trade marks and logos to the franchisee. It is even possible that franchisor allows using trade mark to manufacture a totally different product. This can happen in case if franchisor wants to diversify his business. Coco Cola Company is an example of this type of business.
Retailing
In this type of franchising, franchisee gets the right to distribute products of franchisor. Franchisee can use the name and trademarks of franchisor's business. West Side and Pantaloons are good examples of this franchising type.
Standardised business structure
In this case the franchisee runs the business in a standardized format provided by the franchisor. The entire business process of franchisee resembles the actual business of franchisor. Right from manufacturing to serving customer, dress code of the employees, culture of the organisation everything has a similar set up. It is within the legal specifications of a particular nation in case of international business. McDonalds and Pizza hut are the well known examples of these types of franchises.
Advantages of franchising
We can see lots of franchises running successfully in India and around the world. Have a quick look at the reason behind the success of these franchises.
- Enables franchisee to use brand name of the franchisor
- Enables the franchisee to enter the well established business
- Enables the franchisee to get marketing support from franchisor
- Franchisee can be aware of the new technologies used by franchisor
- Franchisee can use the ready-made business plan developed by franchisor
As you will get all the required guidance from the franchisor you can combine it with your skills. You can take the business on the new heights. You can make you investment not only safe but also highly profitable. So get ready to follow the foot marks of successful entrepreneurs and leave your's too. Ready to be your own boss?
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