entrepreneurship

Entrepreneurship

Benefits of Buying Franchise

Management Training and Support

Leading cause of business failure is incompetent management.

Many franchisers provide training and counseling services.

These program teach franchisees the details they need to know and

run for day to day operation successfully.

Training program can be in the form of in-class or on-site instruction.

Franchiser provide the necessary training to franchisees continuously.

Brand Name Appeal

Franchisees purchase right to use the brand name for product or

service.

Because of brand name, franchisees get so many customers even

they open the outlets in a short time.


Franchisees aware negative actions by franchisers or the others

competitors.

Standardized Quality of Goods and Services

Because franchisee purchase license to sell franchiser’s product, the

quality standard can be determined by franchiser.

If franchisee try to operate substandard lever, the entire process will be

suffer.

Therefore franchiser has a right to terminate franchise contract if

franchisee fail to establish required standard.

National Advertising Programs

Effective advertising programs is necessary for the success of franchise.

Regional or national advertising make benefits to franchisees.


Advertising campaign is organized and controlled by the franchisers.

The franchisers but franchisees actually pay for campaign.

Many franchisers want franchisees to contribute the minimum

amount for the advertising.

Financial Assistance

Franchisers don’t provide any financial help because they depend on

their franchisees’ money.

But franchiser provide loan to pay for the initial franchise fees.

Financial assistance from franchiser take other forms than the direct

loan.

Because of franchiser, franchisee can make good relationship with

the bank, nonbank lenders.


Proven Products and Business Formats

Even there is a force to establish business, franchisee will follow the

standard and business formats of the franchiser.

These standard procedures can make franchisee success and get

more profits.

Franchisee don’t need to struggle to get brand recognition as much

as the local competitors.

Centralized Buying Power

One of the benefit of franchisee is the participation of buying the

large volume with the franchisers.

Economies of scale prevent business owner from competing head to

head with franchise operation.


Site Selection and Territorial Protection

Location is critical for the success of small business.

Therefore becoming affiliate with franchisers is the best way to get

the prime location.

Although choosing the location is the responsibilities of the

franchisees, the franchiser have right to decide about the location.

Greater Chance for Success

Even investing franchise is risky, survey said that investing

franchise is less risky than building of new business.

The success of franchise is depend on the franchisee’s

management skills, motivation and experience.

Drawbacks of Buying Franchise

Franchise Fees and Ongoing Royalties

Every franchisee needs to pay the fees and share of revenue to

the franchiser for using the brand name, products and services.

Most franchiser ask the franchise fees for using the brand name

however some ask the fees for location analysis, site purchase

and preparation.

Franchisers also impose ongoing royalty fees as revenue-sharing

device.

These ongoing royalties can increase overhead costs.

To avoid, franchisees should determine how much they need to

pay and the benefit they can get from the franchiser.


Strict Adherence to Standardized Operation

Although franchisee owns the business, he don’t have the right

to make decision about operation.

To protect brand image, franchisers want franchisees to follow

their standard.

If franchise fails to meet with the minimum standard, the

franchiser can eliminate the license.

Franchiser determines compliance of standard with periodic

inspection and mystery shoppers


Restrictions on Purchasing

In order to control quality, franchiser requires franchisees to buy from

the approved suppliers.

The franchiser can’t determine the retail price of the product for the

franchisees but they can give the suggestions and advices to the

franchisees.

Limited Product Line

There is an agreement in the franchise that the franchisee can sell only

the products that was approved by the franchiser.

So franchisee to sell the products which is required in local market is

restricted.


Contract Terms and Renewal

Because the franchise contract is written by the lawyer of

franchiser, there is a favor for franchiser.

Some franchisers want to do the negotiation but the successful

franchisers believe that they don’t have to.

Unsatisfactory Training Program

Major benefit of franchise is the training program which is

supported by the franchiser to franchisees for the continuous

success.

Before signing, the franchisee should find out the detail of training

program to avoid unexpected problems.


Market Saturation

Franchisees reap benefits from the franchise but they also face the

franchiser’s strategy: market saturation.

Franchisees are upset and claimed that their market are saturated

and their sales volume are suffered.

Less Freedom

When franchisees sign the contract, they agree to sell the products of

franchiser.

Franchisers make ensure the success of franchisee, so they monitor

the performance of franchisee.

Therefore even franchisee can run their business freely, they need to

report to the franchiser.

The Right Way to Buy a Franchise

There is a problem because of dishonest franchiser.

Therefore you should think about the following facts

Evaluate Yourself

Before doing franchise you should ask yourself about goals,

experiences, like or dislike and income requirement.

Knowing yourself will help you to narrow your search.

one point of successful franchise is do the jobs what you want

to do.

Research Your Market

before doing franchise, you should research your market.


Take some times to know about your customers' requirements.

Knowing the fad and the long-time trend is the best one for

success your business.

Consider Your Franchise Options

There are so many options to do franchise in the business

magazines.

You can make a decision what is suitable for your investment.

Moreover there are franchise showcase sometime and try to

attend these showcase can help you to get more information.


Get a Copy of the Franchiser's UFOC

You should contact each franchiser and ask to show copy of its

UFOC.

It is the important one for evaluating the franchiser.

And then you should care about the franchisee turnover rate,

rate at which the franchisee leave the system.

Another important aspect is the culture of the franchiser's

organization.


Talk to Existing Franchisee

This is the good and cheap one for investing the franchise.

You should go and ask the people who are doing the franchise

about cause and facts of franchising.

Make Your Choice

After doing research, you need to make a choice.

Moreover you should have the business plan that will help you

as a guideline of your business.

You can manager your financial base on this plan.

Benefits of Buying Existing Business

Successful existing business may continue to be successful

Purchasing the successful existing business with the reasonable

price is good

New owner can find the new customers while there are still

existing customers.

However it is difficult to modify the existing system.

Existing business may already have the best location

Getting the best location is the critical point for business success.

It is better to buy the existing business which already have the

best location.

Location may be the biggest assets of existing business.


Employees and suppliers are already established

Existing business already established good relationship with the

suppliers.

In addition, existing business has the records of suppliers.

The suppliers still provide the things what you want and help to

run your organization smoothly and successfully.

Equipment is installed and productive capacity is known

Buying the new equipments can increase the cost for the buyer.

Therefore the buyer should determine the condition of

equipment and its capacity.


Inventory is in place and trade credit is established.

Proper amount of inventory is required to control cost and provide

sale volume.

Existing business know the inventory level that can overcome both

problems.

Moreover previous owner has established trade credit with the

suppliers can that can make benefit to you.

New business owner hits the ground running.

The person who purchase existing business can avoid the time,

energy and cost required to start up a new business.

He/ She don’t need to invest for his/ her lifetime building a

company.


New owner can use experience of pervious owner.

New owner can easily know the costs and revenue of the

business from the experience of previous owner.

And then the new owner can learn the mistake from the previous

owner.

Moreover previous owner was helpful for unwritten and

unmasked rules in the business area

Easier Financing

Attracting financing to purchase existing business is easier than

finding for the new business.


It’s a Bargain.

Some existing business may be real bargains.

More specialized business is that buyer can find bargain.

If special skills are required for doing the business, the number

of potential buyer will be smaller.

Drawbacks of Buying Existing Business

It’s a loser.

Business may be sale because it is struggling and owner don’t

want to continue the business.

Business owner persuade the buyer by using the dishonest

information and attractive financial status.

Buying existing business is very risky.

If there is a plan to improve the struggling business, the buyer

should not think for buying.

Previous owner may have created ill will.

Improper business behavior can make ill will for the business.

Because of ill will, the long-term effects of business may not yet

appear in the financial report.


Employees inherited with the business may not be suitable.

Previous managers kept marginal employees because of their

personal bias.

For this reason, employees do not welcome the new owner and they

don’t be able to accept the management style of the new owner.

Business location may have become unsatisfactory.

Prospective buyer should evaluate the existing market area as well

as the potential of expansion.

The important point is that they are buying the future not the

existing one.

If business success has a link to the location, acquiring a business in

a declining area is not the good idea.


Equipment and facilities may be obsolete or inefficient.

Potential buyer sometime forgets to evaluate the existing

equipment and facilities before they purchase.

Equipment and facilities should be ready and good for the

business.

Change and innovation are difficult to implement.

It is easier to plan for change than to implement.

Rules and regulations defined by the previous owner may be

difficult for the new owner to change what he/ she want to modify.

Potential buyer should think about the time and energy to change

the ineffective procedures.


Inventory may be outdated or obsolete.

Smart buyers know that by evaluating the inventory is better to trust than the

balance sheet.

Therefore buyer must judge inventory by its market value not by its book

value.

Account receivable may be worth less than face value.

Like inventory, account receivables may be worth their face value.

Buyer should age the account receivable to determine their collectibility.

The Business may be overpriced.

entrepreneurship

Documents

lawyer of franchiser

franchisee success

franchisee dont

success of franchise

benefit of franchisee

franchisees money

franchise operation

successful franchisers