What is a franchise in business - we will tell you simply and in detail how it works + useful tips on using a franchise

Franchise- the least risky way to start a business. Franchising originated in America in 1851 with the sale of the Zinger sewing machine. Recently, the number of entrepreneurs and businessmen has been constantly increasing, and the popularity of franchising when starting their own business is growing.

To start a business, it is not necessary to have experience, calculate the budget, know the intricacies of doing business - you can buy a franchise on certain conditions with a guaranteed profit.

If you buy a franchise, then starting a business can be much easier and faster. According to statistics, the promotion of certain types of activities can be reduced by 5 years. Half of the companies that have appeared on their own, do not withstand competition in the market, are liquidated on their own within two years.

The owner, having obtained the right to conduct business under some well-known brand, must only have a premises that meets the requirements of the seller, the means to purchase a franchise. Thanks to a well-known brand, name, an entrepreneur receives advertising, additional customers.

Let's take a closer look at the franchise.

Franchise in business

Franchise - the acquisition of the right to start your own business (licenses) under a well-known trademark. An individual entrepreneur acquires information that relates to manufacturing technology, the sale of finished products, doing business, and software. Often they have commercial value. The transferred documents are called differently: a franchise agreement, a license agreement, a commercial concession - the meaning is the same.

A franchise can be: a method of doing business, a trademark, a new technology. Between the party transferring the rights, which is called the franchisor and the acquirer - the franchisee, there are mutual obligations. Benefits are designed in accordance with the law protecting intellectual property.

A correctly acquired franchise is a guarantee of success in entrepreneurial activity. The choice of a franchisor is influenced by the type of activity you want to do. For a successful purchase, you need to be guided by the following tips when choosing a franchise:

it is necessary to study the history of the emergence, the "life" of the company, organization;
find out how long, whether successfully there are franchisees who cooperate with the company;
study the terms of cooperation: the volume of investments, supplies, your rights, the quality of education;
find out what are the requirements for equipment, location of the enterprise;
find out the conditions for the supply of raw materials to ensure activities (products, goods, equipment);
What are the franchise fees?

For cooperation, it is necessary to conclude a contract, sign a franchise agreement.

The contract must clearly stipulate the rights to use the finished business - this is the purpose of the signed contract.

After signing the contract, the franchisor transfers the franchise package. The package includes all the materials, documents, methods for running a business, with which you can quickly open your own business.

His reputation, popularity, profits depend on the organization of a new business under his auspices. Therefore, the formation of a franchise package is carried out with great attention. Its composition is strictly specified in the contract and must be discussed when signing the contract.

It is advisable to know in advance what is included in the package - a franchise, a standard good set includes:

assistance in the formation, functioning;
training;
use of a trademark, production technologies, product sales;
instructions, recommendations for conducting activities;
form of the company's style;
legal documents;
software;

Before purchasing a franchise, you need to clarify which services are provided for an additional fee.

Legal aspects of a franchise

There is no concept of franchise in the legislation - its analogue is "commercial concession".

The term Franchising is not mentioned in the legislation. A synonym - a commercial concession is mentioned in article 54 of the Civil Code of the Russian Federation. The article states that all contracts must be registered with Rospatent. Franchise is often used by start-up entrepreneurs. Unscrupulous businessmen sometimes try to conclude a sales contract with them. This agreement has nothing to do with a commercial concession.

Carefully read the contract, especially written in small print - the most interesting! Do not leave unexplained what is in doubt. Before concluding a contract, you need to have as much information as possible about the franchisor.

The contract must be concluded in writing to be presented to FGU FIPS.
It is usually issued for three years or indefinitely. The contract can be extended.
It is better to study the franchise agreement with a lawyer.

Pay special attention to the conditions put forward when terminating the contract.

Basic forms, types of franchise

There are many franchises with the degree of participation of the franchisor in management, by the form of payment, by the place where the product is sold, etc.

Usually a novice businessman himself selects the most suitable option for him. The main types of classification:

classic, standard. It is the most popular all over the world. According to the agreement, a lump-sum fee is paid, periodic deductions are made to the franchisor. Also, constant monitoring of the company's activities, its compliance with the requirements of the contract, codes of the trade brand is carried out. In the process of doing business, the right holder has the right to make adjustments to the work of the company;
free. She is our most popular. It has a low royalty rate, a large freedom of action for the entrepreneur. There is practically no control of the parent company, the ability to conduct business independently;
import-substituting. They become more popular with the introduction of economic sanctions. Entrepreneurs try to offer domestic goods similar to imported goods. When buying a franchise, an entrepreneur receives a technology for the production of goods abroad, and the production is carried out in our country;
turnkey business (silver)- finished work. It is possible to open a branch of the company in any city, sell the brand by franchise. Payments are usually royalties. You can immediately start work, receive income;
business for rent. Franchisees do not even need to set up their own business. The franchisor receives monthly income, which is stipulated in the contract, without managing the business - saving his time. This option is popular with start-up entrepreneurs and is beneficial to both partners;
master - franchise (gold). Business rights are monopoly in a certain region. The price of the license is high, but over time it will definitely pay off. It is acquired by businessmen with extensive experience who prefer to work “on a grand scale”. An entrepreneur can open a network of companies in the region under one brand;
corporate. The owner of the trade brand controls the business, he can run it himself. It is easier for a beginner to learn how to run a business under the guidance of professionals.

There are also types:

industrial. Most often, the license is transferred to products that are patented;
commodity. A sales scheme for the products of the company - the copyright holder is acquired - well-known brands are sold;
business. It is based on the technology of doing business by the parent company;
conversion. The main line of business may change;
child. It is possible to create an independent business under the leadership of the copyright holder. It is used very rarely.

This classification is generally accepted and quite conditional.

As you can see, there are many different franchises. Even with a small start-up capital and business experience, you can choose the right franchise.

The main types of franchises that bring the most income

The franchise is guaranteed to make a profit already at the initial stage of a businessman's activity.

The maximum income, subject to the minimum start-up capital, is brought by:

construction business: sale of building materials, services related to home improvement, its repair;
supermarkets;
catering establishments with a well-known brand (cafes, restaurants, fast food establishments);
food production;
services in beauty salons, gyms;
banking services of well-known banking institutions;
various virtual stores promoted on the Internet.

How to buy a franchise

As soon as the idea appeared, the idea of using a franchise to open your own business, you need to start looking for offers to sell a franchise on the Internet, in catalogs.

You can find all the information you need on these sites: types, franchise costs, e-mail, contact information. Any business is still a risky business, mistakes and problems are possible when buying a franchise. Therefore, it is necessary to collect as much information as possible about the franchise that you are going to buy, study and analyze the data obtained. They will help you make the right decision.

When choosing it, you must:

Calculate the approximate cost of the business before receiving the first profit.

The cost, at first glance, cheap can increase significantly. Therefore, it is necessary to carefully study the features of doing this particular business. The founding company often does not take into account certain nuances and subtleties that are known to a specialist when calculating the cost of a franchise. It is advisable to involve experienced specialists for the calculation.

weigh the financial possibilities. It is necessary to take into account the funds that you have and can use to start your activity.

Remember that a purchase is not just a lump sum payment. In addition to monthly payments, funds are needed for registering a legal entity (if any), renting premises and other expenses. The cheapest option is an Internet franchise. There is no need to rent a space.

expediency, relevance of the chosen direction of activity in the place of residence;
ask the franchisees associated with the company you have chosen how profitable this type of activity is, what effective assistance the parent company provides, how popular its name is with customers and product suppliers;
choose according to your desire - the case should be to your liking. They may have to do more than one year.

There are two ways to pay for a franchise:

lump sum- a one-time fee for the purchase of rights. Its value is set by the copyright holder. The money is transferred to the account of the franchise owner immediately upon signing the contract. When renewing the contract, the fee is paid each time. This method is used by small companies that will not exercise control over the income of the new company;
royalty- this is a periodic payment for services (usually monthly) for the use of a franchise. Deductions depend on trade turnover, on income (most often they are 10%). The amount can be fixed or stipulated in the contract. Payments are paid before the end of the term of the concluded contract. This method is usually used by large companies, corporations that control the activities of a businessman and monitor the income of the franchise owner.

In commodity franchising, there is no monetary contribution; it provides for the purchase of a certain number of goods. As a piano - the periodic purchase of goods.

In the absence of a sufficient amount of the required funds for the purchase of a franchise, it is possible to take a loan and pay its cost in installments.

Franchise work

When buying a franchise, you are a representative of the copyright holder company. At the same time, each franchise, in addition to its own conditions in the contract, also has common ones.

Responsibilities in cooperation with the brand owner:

granting a license on its own behalf to conduct activities, a business model, consults on doing business, provides useful information for the successful execution of powers, introduces you to the nuances, conducts briefings for all personnel, and provides comprehensive assistance;
controls the activities of the buyer, keeps records of purchases, sales, periodically conducts inspections;
provides information about the brand;
conducts the registration of a commercial contract independently.

In some cases, the right holder may allow the use of only certain premises for activities, prohibit open competition with such companies. Often large companies do not want to accept newcomers - entrepreneurs - into their business.

Franchisee Responsibilities:

works on behalf of the franchisor, receiving instructions, commercial designations;
fulfills the requirements of the copyright holder;
exercise powers to the extent specified in the contract
the quality, range of services provided by him must correspond to what is provided in the company of the right holder;
does not have the right to disclose trade secrets;
customers, customers must be informed that the establishment was purchased under a franchise;
makes deductions from the proceeds received.

The main requirement for the franchisee is to follow the instructions, work successfully, and make a profit from their activities.

Positive and negative sides

Before buying a franchise, entrepreneurs often have questions: is it profitable, does it make sense to invest money, time in franchising, what are the pros and cons of this type of business. There can be no perfect business, so let's look at the advantages and disadvantages of acquiring a franchise.

This type of business for an entrepreneur - a beginner has many advantages.

The main advantages are the following:

minimal risk. By acquiring a project "with a name", the franchise buyer's business becomes a link in a large corporation. The entrepreneur receives instructions on how to develop a profitable business;
recognition of a well-known name. According to the agreement, under the contract, the name is transferred, which is known to many, popular;
cost - much less investment is required to promote services, advertising - a centralized advertising company;
protection against losses in doing business - support for the franchisor in doing business.
saving time required for promotion;
fast income. Excellent revenue can be received from the first days of the company;
using the experience of the right holder, who organizes staff training courses, supports the activity. He himself is also interested in the speedy development of the business so that it is as profitable as possible;
technical and informational support of the founding company. If necessary, you can get support in the means, advice.

Franchise Disadvantages:

It takes a lot of money to buy a franchise. The cost depends on the choice of the franchisor. But it's your choice!;
actions must be clearly coordinated with the actions of the right holder required;
lack of personal initiative in the vision of their own business. Possible claims: restrictions on the rights when doing business, there may be a ban on holding one's own actions, increased requirements for premises and staff;
in case of violation of the requirements of the contract, a fine may be imposed;
the amount of monthly payments may vary;
there may be restrictions on the purchase of raw materials. It will be necessary to buy it only from partners or the franchisor himself (there will be no choice);
often the contract is drawn up so that the brand owner can get the maximum profit, and the franchise buyer works for days. But it is necessary for the rapid development of business.

Franchising, like any business, has its pros and cons. To make a balanced, the only right decision, it is necessary to pay due attention to them.

Conclusion

Using the brand of a well-known company when buying a franchise, a novice businessman can compete with successful players in the market for similar services. It is developing quite well. The owner of the brand transfers the contacts of the suppliers of his name. Most customers are attracted by the recognizable brand of a popular company. Therefore, the franchise is becoming more popular and in demand among start-up entrepreneurs.

If you are interested in freedom, opportunities, big money, try to start a new life, pay attention to franchising. A franchise will definitely help you start a successful business quickly, even with a small amount of capital. The main thing is to have a goal and strive for it.