With this method of doing business, as franchising, transfer was right to implement its product or service to another company.
From 1995 to 2000 in our country worked only 22 franchise systems. Two years later came a special interest in the scheme of business development. At this time, the number of enterprises operating under franchise has risen to 70.
Franchising is a network business. It can include as few points as well as a few tens of thousands.
Benefits of such networks are to copy a successful business. But if the business is only beginning to develop, then franchising is not suitable for him.
Another option: a corporate network. It is rigid control center. To develop such a network, you need capital to open new outlets. And his search is known to be associated with some difficulties. Another negative – all the risks associated with the opening of additional points, go to the management company. Also, if a network is very large, then it is difficult to manage.
Franchising is just to minimize such problems. Include the problem with the finances for it because each point was called the means of the franchisee. Risks that are distributed among at all the points. The big advantage of franchising is that the parent company does not solve the problem of outlets. As a result of its employees do not have to handle large volume of work associated with it. But most probably the main thing is that franchisees are interested in making profits much more than salaried managers.
For franchisees main benefit – an opportunity to start a business, not while possessing no experience in the field of entrepreneurship. Throughout the duration of the contract it will provide the necessary assistance from the parent company.
One of the drawbacks of such a system for the entrepreneur is the need to invest their own money and one more – this restriction on his freedom of existing standards system.
Typically are franchisees each month to pay the franchisor royalties. Their size is about 5-6% of sales. Sometimes the payments can be fixed.
There is a franchise of the product and name. In this case, one company provides another license to conduct business using its name.
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