What is franchising, franchise, royalty: the best offers from the franchise catalog, how to open your small business franchise. Calculating the cost of franchising.
Franchising seems to be an attractive start-up or spin-off business for many entrepreneurs. What are the minimum initial and operational financial “numbers” for working with franchises, what to ask and what to calculate when choosing a franchisor, what franchising proposals should be considered.
What is franchising, franchise, royalty
As you know, franchising successfully combines two main types of starting a business: starting your own business “from scratch” – and acquiring a ready-made, operating business. Indeed, with this kind of contractual relationship (franchise agreement), a new point of sale is established, owned by its founder (franchisee) himself. But at the same time he uses the promoted brand (the bearer of the brand is called the franchisor), and production technologies, and sometimes the equipment, also “come” from the franchisor.
The main terms (and realities) of franchising relations are:
- Franchise – the right acquired from the franchisor to enter into a certain entrepreneurial activity:
- in which the franchisee’s outlet is a separate business entity, independent of the franchisor, having only a contractual partnership with him
- which is largely associated with the name, trade mark, advertising or commercial symbols of the franchisor;
- in which there is a long-term financial interest of the franchisor and the franchisee in the operation of franchise outlets;
- in which goods or services are sold, offered for sale or marketed in accordance with a specific marketing plan;