4 Characteristics of Good Franchise. What Good Franchise Package should look like.
Monday, July 27th, 2009Franchising is a tried and tested system of doing business of selling goods or services that can be replicated by others. Typically a franchisee pay an initial fee plus continuing royalties or management fees. In return, they will receive franchise package, all that he or she needs to operate a clone of the original business.
This is what you should find in a properly assembled franchise package:
- An entire business concept explained fully and clearly in an operating manual;
- All the visible trappings of a business, such as trademarks, logos, livery of vans, colours and patterns of uniforms, plus designs for premises;
- Accounting and financial systems, which these days may be computerized in an easy-to-use way;
- Training in how to operate the business and help in setting it up;
- A detailed contract setting out the rights and obligations of both parties — the franchisee and the franchisor;
- Continuing support once the outlet is operating;
- The legal right to operate within an exclusive territory;
- Marketing, public relations and advertising support.
The scope and diversity of franchising opportunities is impressive. This includes Advertising, Marketing Franchise; Automotive Franchise; Business Consulting Franchise; Business Opportunities Franchise; Child Products, Services Franchise; Cleaning, Maintenance Franchise; Computer Franchise, Copying, Shipping, Signs Franchise; Financial Services Franchise; Fitness & Gyms Franchise; Food: Service, Retail Franchise; Internet Franchise; Health, Beauty, Nutrition Franchise; Recreation, Sport, Travel Franchise; Retail Franchise; and many more. To learn more on franchising opportunities, visit Franchise Advantage.
Importantly, A good franchise must have four characteristics. If any one of these is missing, its chances of success are diminished. They are:
- Standardization: The franchised business must lend itself to replication. This is not a matter of each outlet being broadly similar to every other — it should be as near as possible identical. It should offer the same goods or services in the same way. It should use the same brand, logo and image. It should use the same financial, marketing and accounting systems. Take McDonald for example, arguably the most public face of franchising, not just in this country, but across the world.
- Unique selling proposition (USP): This is the holy grail of all business and marketing. It postulates an ideal: some special quality that marks out a product or service from all the competition and cannot be imitated. USP must have the unique difference. Often this difference is expressed in branding — that bundle of qualities comprising name, logo, colour, reputation, recognition and reputation that is the unique property of one company and no other. But behind the brand is delivery of customer expectation: for a brand to have value it must be associated in the customer’s mind with quality, service, reliability and predictability.
- Ease of operation: What franchising can do better than any other way of running a business is to take people from a wide variety of backgrounds and with varying experience, skills and abilities and train them to do something quite different from what they have done in the past. It can take a farm manager and turn him into a weed-control expert, it can turn a bank manager into a printer. But it can’t work miracles. Every method or skill taught by a franchise should be quite easy to learn. Though every reputable franchise offers training to new recruits, in practice the quality and duration of the induction process vary quite widely, and you should investigate how thoroughly you will be trained in the processes of running a new business.
- Gross margin on sales: The franchised outlet is like a hard-working child who has to support demanding parents. Both the franchisee and the franchisor will want a share of the proceeds. No one could rightfully begrudge the franchisee his or her profit: after all, they put in their money; they applied themselves diligently during the training process (or certainly should have done); and, most importantly, they continue to strive daily to make their franchise a success. The reward will be a growing business that are measurable in Gross Margin on Sales. You are in business to make money.
