All About Franchising in a Nut Shell

In simple terms, a franchise gets created as part of an agreement made between the franchisee

and franchiser. Here, the franchisee has the authority to use the franchiser’s trademarks and

logos and market its products. A legal agreement is being made to protect the individual

interests. An initial franchise fee is paid by the franchisee and a royalty payment from that time

on.

Franchising has now become an established business activity. With the help of franchisees,

large corporations can achieve diversification and also an upper edge over other small

businesses. This is now increasingly popular in many different industries, especially the food

industry. Along with fast food restaurants there are many other such sectors that are franchised

today actively. With franchises, a business has the potential to create new business units. As

per a recent survey, around one-third of total retail sales are made via franchise stores.

Nothing can be more comforting than owning a successful franchise in food or any interested

industry. But care should be taken while opening a franchise store in a new market. Many times

the outcome does not meet the expectations. For restaurant owners who are interested in

expanding their business but have shortage of management personnel or financial resources to

operate a chain of stores, creating franchise opportunities can be a solution to the problem.

The initial franchise cost is the onetime payment made by the franchisees in order to secure the

new franchise. The royalty fee paid henceforth depends on the gross sales from different stores.

A franchiser can make money through the franchise fee, sale of supplies and the royalty fees. In

order to obtain the legalities of a franchise, one needs to consult a franchise lawyer and a

consultant having good knowledge about franchising. The franchise lawyer will do the

necessary paper work like franchise contract, register and drafting of franchise offering circular

and the like. The right consultant on the other hand can help you with advertising, operation

manuals, public relation materials and training programs.

If you are making a profit with your franchise business then you can always put the businesses

for sale if you want to. You can get potential buyers who can strike a deal with you. But if you

are not making enough profit then it is pretty difficult to sell your business in the market. There

are also magazines available which are dedicated in providing data regarding the franchising

business.

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