Předmět: Retail Management
Škoda Auto University
Essay – additional work for absentee
Lecturer: Ing. Eva Jaderná, Ph.D.
Name: Foma Koževnikov
Becoming a Franchiser is difficult, it takes very long time (sometimes a year) and considerable cost. Often the key of franchising success is about making thoughtful, intelligent and smart decisions early on, so that the structure of creating a Franchisee is correct later on. Important is to mention legal paperwork that is inevitable to be done to make sure your business complies with federal and state laws.
After becoming a Franchiser to sell the first business unit can take easily up to two years, which is a long period of time. Although even if a business is qualified as a Franchiser, it does not mean that Franchisees buyers will be interested. Anyways it is believed that using franchising strategy is a straight path to a rapid success, unfortunately not. The failure may occur due to economy problems, wrong structure choice or poor system.
On the other hand if franchising is used effectively, it can reach enormous success with a low capital invest. Probably every business owner dreams about expansion of the business throughout the country, or even globally, right?
Guide to successful franchising strategy
1) Consider your business
Is it ready for franchising? Does your business brings good returns? Is it easy to replicate? The best way is to have something unique, but familiar for people. Example: Pizza Fusion (origin – Florida), they offer a familiar product – pizza, but with all organic ingredients, delivered in a hybrid – electric automobiles, which is unique.
2) Gather market research
Ask yourself if there is a demand across the country for that specific product or service; and place in the market for a new competitor?
3) Prepare to be flexible and change
No more selling pizza, from now on you will be selling Franchisee, guide and supporting them. You will become a salesperson and teacher. Franchisees will not do exactly everything as you did. This is why you have learn to be flexible with others views.
4) All possible alternatives
Dереnding оn уоur situаtiоn slоwеr grоwth, finding dеbt finаnсing оr tаking оn раrtnеrs аrе аll аltеrnаtivеs thаt mау рrоvе bеttеr wауs tо mоvе fоrwаrd.
5) Important decisions – key factors
• The Franchise fee and royalty percentage
• The term of your Franchise agreement
• The size territory you will award each Franchisee
• What geographic area you are willing to offer Franchises within
• The type and length of training program you will offer
• Whether Franchisees must buy products or equipment from your company
• The business experience and net worth Franchisees need
• How you will market the Franchises
• Whether you want an owner-operator for each unit or area/master Franchisees who will develop multiple units
6) New members hired
It is suggested to hire specialists in different spheres such as:
Marketing assistant – for sales
Trainer – to train the structure
Franchise advocate – to resolve any franchising problems
Creative director – to ensure everything is under control
7) Franchisee support
Upgrade training programmes fast as you can. Representative uniforms in all of the chains. Huge amount of money should be spent on Marketing of your Franchising strategy. At the end, it depends on your support of the Franchisee and good-well organised structure, especially in the field of Marketing.
My findings about Franchising
Introduction to Franchising
What is Franchising and how it works? Well in the beginning it is important to say that Franchising is a system of doing business. The system has to sides, Franchiser and Franchisee. Franchiser means a legitimate business that is qualified to sell franchisees. Franchisee is another party or an entrepreneur that is allowed to use the same trademark, trade name, business systems and process as the Franchiser.
Explaining of the process
To simplify, lets say there is a business called ¨Purple-fish¨ – a restaurant that sells these purple fish products, located in China. The Purple-fish is profitable and successful. An American person likes it, and says to himself how about opening one in U.S.? Contacts the owner of Purple-fish (which is already qualified to sell franchisee) and they make an arrangement which (usually) includes: the cost of franchisee, percentage of sales revenue, rules, location, system and process, and of course the name has to stay the same – Purple-fish. After an agreement to start a Franchisee, the new Franchisee owner is gifted by the Franchiser with:
1) Name recognition – Purple-fish
2) Tried and tested products
3) Standard building design
4) Techniques, rules and system in promoting the business
5) Training of employees
6) Continuous help & advice
In the beginning I want to say that I have chosen this topic without knowing much about it. Throughout this research – essay I have learned many interesting facts about franchising strategy. If any of these two aspects: Marketing or support will not be tolerated, then the Franchisee will fail. I got really interested in this topic and hopefully one day I will be able to experience franchising on my own.