Which is better franchise or business. Franchise business

When I am asked the question “How is it more profitable to develop and what to invest in: franchising or own business? ”, I always answer that the choice is obvious enough. Franchising gives you reliable guarantees that your business will not only not fail, but will also be successful, which your own business cannot promise.

The main advantage of franchising is the stability of the model and the stability in the market. This is achieved due to an operating model that has been verified and tested on its own network, which immediately allows avoiding many mistakes at the initial stages; an already promoted and recognizable brand allows to reduce the time required to bring the restaurant to full capacity and significantly saves money to enter the market; full support of all processes - from the organization of the opening to the work on operational processes already provides ready-made, most effective solutions, debugged on its own network for a long time.

Due to this reliability and stability, Domino's franchising has been holding a strong position in the world market for over 60 years. And with many years of experience in both its own and franchise network, the company provides the best practices, systems and approaches for franchise partners around the world.

If we talk about our own business, then for the most part, the discovery of an independent concept very often ends in failure. During the year, the funds spent, as a rule, do not pay off, moreover, they are almost irretrievably lost, not debugged processes, business promotion by trial and error, high software costs, creating and maintaining a back office give a very large financial burden, all this could lead to closure within a year or two.

It is also important to note the recent trend in Russia: many brands are striving to dominate the market, both Russian and foreign. It is not difficult to guess that it is very difficult for local brands to get along in the face of such strong competition, which forces them to leave their positions and close their businesses. In Moscow, this trend has appeared a long time ago. It should be added that the more intensively the market segment in Moscow develops, the more likely it is to appear in the regions.

If you want to open your own business, then you need to understand how important it is to constantly invest in marketing, IT, HR and operational support for the concept to succeed and pay off. In the case of a franchise, you pay only royalties, and the same huge staff of professional employees works for you, the maintenance of which is no longer for you.

To confirm the above theses about the effectiveness of franchising, one can give an example from Domino's Pizza practice: one of the company's franchisees showed full capacity during the first few months and showed a net profit of 1 million rubles per month.

Franchising in the area restaurant business it develops more and more intensively every year. Specialists from the Russian Franchising Association, which is developing this area in our country, play an important role in this. However, unfortunately, the RAF does not have supervisory powers, since it is only public organizationrather than a supervisory authority. For the progressive development of domestic franchising, serious changes are required at the legislative level. Due to the lack of control over franchises, many global brands, entering the Russian market, do not play according to the rules of classic franchising. Domino's Pizza fully supports the classic franchising model and registers commercial concession agreements with Rospatent.

Starting a business, as a rule, is associated with the emergence of doubts about the direction of the activity, as well as a number of questions about how to implement it. Many entrepreneurs prefer not to “invent a bicycle” and opt for a promoted business idea that is in demand in a certain region. It would seem that for this you need: buy the right to use the brand and collect laurels. However, everything is not so simple.

You can find out if it is worth starting your business with a franchise, as well as what advantages and disadvantages it has, by reading the article.

What is a franchise

The franchise is:

• the object of the franchise agreement;
• a set of benefits providing for the transfer of the right to use the brand from the franchisor (seller of goods) to the franchisee (buyer).

Features of the franchise agreement:

• the object of the contract can be both a trademark and a technology;
• the clauses of the agreement provide for mutual obligations between the seller and the purchaser of goods, as well as conditions, in particular preferential, for the use of the franchise;
• use of the franchise is carried out on a paid basis;
• the contract establishes the period for the use of benefits, as well as the region in which the franchisee is entitled to conduct its activities;
• the legality of a franchise agreement is governed by special regulations designed to protect intellectual property.

To understand how a franchise works, it is best to look at use cases that are well known to a wide range of users. Now the Subway franchise is in demand and is in demand among buyers, on the example of which we will consider the procedure for the practical implementation of a franchise agreement.

The cost of the franchise depends on the size of the initial or, so-called lump-sum fee, the purpose of which is to pay for the direct use of the brand. The peculiarity of this registration fee lies in its irrevocable nature.

If we talk about the Subway brand, then before the opening of the first restaurant you will have to pay a fee of $ 12,000, and this amount does not include VAT. To open a second restaurant will require less funds, namely $ 9 thousand, and the third, however, like each subsequent one - six thousand, again excluding tax. Opening a kiosk under this trademark involves paying a fee, the amount of which is negotiated in each case separately, but, as a rule, does not exceed 50% of the amount that you would have to pay when opening a restaurant.

Based on the foregoing, we can conclude that opening a franchise business, as well as in any other way, requires a lot of money, therefore, if you decide to start a business, you can't do without initial capital... In addition, the acquisition of a franchise cannot guarantee 100% success of your enterprise, since a franchise relationship, along with advantages, has a number of disadvantages.

A franchise, in fact, is just a good foundation for your business, the further development of which will depend only on you and on your efforts, therefore, before buying a franchise at a startup, you need to weigh the pros and cons and objectively evaluate your opportunities, both financial and moral.

In addition, in addition to the registration non-refundable fee, there will be other expenses, the total amount of which will be from 100 to 200 thousand dollars, which must also be taken into account when planning the future franchise business.

With regard to income, then at first you should not rely on him especially, especially if you took part of the money to purchase a franchise or to pay for related services on credit. However, if you put your business on the right track and put in the necessary effort, success will not be long in coming because promoted brand, whatever one may say, gives its owner a lot of advantages, the first among which is the absence of the need for advertising and customer acquisition. As a rule, the brand name is known to everyone and is popular.

Franchise benefits

Before listing the advantages of a franchise, it should be noted that there are much more of them than disadvantages, primarily because the franchisor guarantees full business support at all stages of its development.

The concept of support includes the provision of the following services by the franchisor:

1. advising franchisees on all issues that are directly related to implementation business activities;
2. provision of materials necessary for the manufacture of products and finished goods;
3. provision of related documents, legal support of the transaction, as well as other operations of a legal nature, such as obtaining permits necessary for the implementation of activities in the relevant authorities;
4. all kinds of assistance in the successful sale of products and promotion of the franchise enterprise;
5. training of franchisee personnel, provision of appropriate instructions and recommendations regarding business conduct;
6. assistance in the maintenance of the enterprise.

The presented list of services that the franchisor usually undertakes to provide is not exhaustive and may be supplemented by minor points, for example, providing the franchisee with special equipment or providing information about the technologies used by the franchisor.

Disadvantages of a franchise

Along with the advantages, a franchise business has some disadvantages, such as:

• the need for a large investment at the initial stage of business development (payment of the registration fee, as well as fairly large associated costs);
• the presence of financial obligations to the franchisor, the fulfillment of which does not depend on how the business will develop, that is, even in case of failure, which is possible, one can not count on exemption from the obligations established by the contract;
• the amount of profit received from the franchise business will be slightly less than from similar activities, but without the franchise. Remember that a portion of the income will go to the owner of the brand you have acquired the right to use;
• constant dependence on the franchisor, in the event that the latter decides to terminate its activities and close its network, all you can count on is doing business until the end of the contract, after this period the case will have to be closed. In addition, even if the franchisor does not plan to wind up, all the difficulties he will encounter will be reflected in the functioning of your enterprise, especially with regard to issues of reputation.

To summarize, we can highlight there are three basic rules that a beginner must follow when starting a franchise business:

1. evaluate objectively your financial and moral capabilities (payment of the registration fee and monthly payments);
2. pay special attention to studying the franchise agreement, it is advisable to enlist the help of a specialist in the field of law;
3. choose the direction in which you understand and which is interesting for you, otherwise failure cannot be avoided.

If you have any questions about starting a franchise business, then our online lawyer on duty is ready to promptly advise you.

Every entrepreneur who wants to open a business with an idea that has already proven itself in the market has a choice: to start independently from scratch or. This choice is more difficult than it sounds, because the money invested in the business is at stake. Some say that a franchise is a waste of money. Others call it the best way to get rich. We'll tell you if a franchise business is profitable and how to make the right decision.

Franchise advantages

The essence of franchising brings it to the fore: perfect cooperation between the seller and the buyer, when the former expands the business with almost no investment, and the latter receives entrepreneurial experience, support and profit. Statistics are also on the side of the franchise, because most newcomers are forced to close in the first year. On franchising, this percentage is much lower. Let's figure out why it is profitable to work on a franchise:

1. By buying a franchise, you automatically get a well-promoted brand, recognizable and with a clean reputation.
2. The franchisor invests in advertising himself. You can save on this item of income and time for shaping the company's image, winning buyers - you can immediately proceed to making a stable profit.
3. Support and training from a franchisor is not something you get when you start alone. The seller can take care of the franchisee, increasing his knowledge, skills and abilities through courses, master classes, training materials, individual consultations.
4. Consulting. When buying a franchise, a partner will help with solving specific issues: providing initial information about the market segment, advice on the choice of premises and personnel, marketing advice.
5. You know the amount you need to run a business, they have already calculated everything for you. So you risk less, taking into circulation too large amounts or stumbling with too small.
6. There are a dime a dozen individual entrepreneurs, contractors will not single out someone, which cannot be said about franchisors. They, as a rule, have established contacts with suppliers and have big discounts, so that favorable conditions will go to you too.
7. The franchisee shares responsibility with the franchisor. It is stress that can prevent a beginner from being calm and confident about business. He does not feel alone in difficult business situations and therefore the franchise becomes more competitive.
8. Often, the franchisor crosses the territory so as not to create competition between its own franchisees. The scope of the expansion is prescribed in the contract.

When buying a franchise, a partner will help with solving specific issues: providing initial information about the market segment, advice on the choice of premises and personnel, marketing advice.

As a result, the picture is rosy: a franchise is easy money. You get the opportunity to develop, immediately rising to the same level with the parent company. But in no case should you draw conclusions without learning about the shortcomings of the franchise.

Disadvantages of a franchise

Franchising is not the dominant system in business, which means that it is far from ideal. The disadvantages are due to the fact that the franchisee does not feel independent with a business that seems to belong to him. And the payback of the franchise depends on many factors. You may face obstacles not only in developing the franchise, but also yourself as an entrepreneur.

The most common problem for a franchisee is. The start itself - a lump-sum fee - costs a lot. Especially if you want privileges, so you won't be able to fit into franchising from scratch. Add to this a recurring royalty payment, which can be a constant amount or a measurable percentage of the profit. It turns out to be serious expenses, which are your responsibility to pay, even if you go broke.

Unfortunately, in Russia there is no legislation on franchising that would regulate its activities from and to, and franchisees usually suffer from this. You should take care of your own people even at the stage of signing the contract by contacting a specialist for help. Do not forget about the powerful legal support of the franchisor.

Another nuisance that franchisees face is the limitation of independence on all fronts. has already drawn up a business development strategy and is working on it, so it will not be possible to get out of this framework. It is important for the franchisor that you maintain the brand image. These standards can relate to the quality of service or the choice of premises and can be very high - such that the chance of burnout becomes real. Even a sensible remark or an effective idea of \u200b\u200ban entrepreneur can be rejected only because the franchise is a well-oiled mechanism that does not tolerate deviation from the standard.

The disadvantages of a franchise are associated with the risks that depend on the choice of the parent company. Franchising has become so popular that even yesterday's newbies are selling it. Sometimes it “shoots”, but more often it leads to bankruptcy of both the franchisor and all of its franchisees.

Even at the stage, your task is to study the company you are interested in, to make sure that it really has a successful experience, a recognizable brand and a good reputation. Moreover, the collapse of the parent company with unconvincing competence for franchising will lead to the closure of everyone who worked with it.

And, finally, another common problem: the franchisee may eventually find suppliers willing to work on favorable terms for him, but there is a requirement of the franchisor - to purchase only from him or from his suppliers. Free competition rules don't work.

Drawing conclusions

Of course, the conclusion is different for everyone, and it depends on the specifics of the business, the expectations of the entrepreneur, the conditions of the franchisor. It would be useful to study the future partner by numbers (if you have access to them) to find out the effectiveness of franchising. Remember, buying a franchise is investing. Therefore, follow the same rules. How much profit will the money invested in the franchise bring? What is the payback period for the franchise? Will I get better at this experience? Approach the decision-making with all responsibility, then you will get a really profitable system that works for you.

Starting your own business is not an easy and very risky process. A lot depends, first of all, on personal qualities, as well as on the economic situation in the market. That is why many entrepreneurs start their business with franchising.

What it is like and whether it is worth buying a franchise - let's try to figure it out, relying on real experience and feedback on franchises of people who took the risk and got down to business.

What is franchising

This is a type of cooperation in which one party (franchisor) transfers the second (franchisee) the right to sell its goods and services or manufacture products under the franchisor's trademark.

The franchisee pays a lump-sum fee and royalties to the business owner, who, in turn, fully controls the activities of the partner, dictates his conditions to him, allows him to use his technologies and developments, development, and in some cases supplies goods for sale.

In our country, the history of franchising began only in the late 80s and early 90s with the company for the production and sale of ice cream "". Abroad, the experience of buying franchises goes back more than one decade. This is one of the most common types of business expansion for promising companies.

In Russia, the most successful directions in franchising are:

• sale of food products;
• organization of catering outlets;
• sale of consumer goods: inexpensive brands of clothing and footwear, furniture, building materials, etc .;
• provision of services: medical, legal, entertainment, etc.

Franchising of manufacturing companies is much less successful and in demand, the development of which requires knowledge of complex technological processes, requires additional costs for materials and other production resources, as well as the availability of qualified personnel.

What is the advantage of buying a franchise

Franchising has many advantages, especially for people who are taking their first steps in business.

Let's take a closer look at the main advantages of the franchise:

1. When buying a franchise, you do not need to worry about the promotion of your business - you acquire a ready-made brand with its own history, promoted name, target audience.
2. You do not need to think about where to purchase raw materials for the production of products, what technologies to use, how to draw up a business plan, what equipment is required to open a sales area, a medical center, etc.
3. The franchisor is actively involved in doing business, providing consulting, marketing and training services.
4. You do not need to spend money on advertising - the advertising campaign is carried out by the franchisor who is directly interested in the promotion of the company's products.
5. When buying, you pay a strictly defined amount, which is calculated in the most accurate way by economists who are well versed in business processes.
6. You do not need to look for partners for your business - the franchisor provides you with the opportunity to cooperate with your partners.

What difficulties a franchise owner can expect

Like any phenomenon, franchising has its drawbacks. Before embarking on a free voyage, you need to learn about all the pitfalls that await you on the way. Reviews of the franchise from our entrepreneurs are very contradictory, and there are also grounds for negative experiences.

One of the main obstacles may be the lack of start-up capital for a down payment. Oftentimes, a lump-sum fee is more expensive than investing in your own business. In addition, the matter is not limited to the payment of a lump-sum contribution - royalties must be paid regularly.

Another drawback that some entrepreneurs point out in their reviews of the franchise stems, oddly enough, from the merits. Constant control by the business owner can limit the independence of the franchisee. This is due to the strict conditions of the contract, requiring full compliance with all requirements for the quality of goods and services.

Regardless of how you are doing, it will be impossible to go beyond the business plan. For ambitious entrepreneurs, this can be a big problem.

The reputation of your business will depend on what the franchisor has. Therefore, when choosing a company, you need to try to get complete information about it before agreeing to buy a franchise or choosing a world famous company such as or.

“If you don’t have any experience in business, and you still don’t have enough life, your pocket is empty, but ambitions do not allow you to sleep peacefully at night, then feel free to choose franchising. I took a chance, bought a franchise fromSubway, and six months later, opened a second outlet, and then several restaurants in neighboring cities.Subway perfectly helps to cope with the first difficulties, directs and very strictly controls all processes. This is the best choice for those who are accustomed to work and take a responsible attitude to business. You gain invaluable experience, and in a few months you will be able to recoup all expenses ".

Franchises in the field of children's leisure, as well as sports or musical and aesthetic education are very popular. Sports and dance club franchises allow many people to realize their dreams not only about business, but also to show their creative, pedagogical and intellectual abilities.

However, there are also negative opinions. Very often this is due to the fact that people buy franchises from companies about which little is known in the region. Because of this, it is much more difficult to attract customers, it requires competent conduct promotions, a lot also depends on the person who owns the business:

“My friend bought goods from a very famous brand in this country abroad. She liked the quality of the clothes and the price. She decided to buy their franchise and open a store in her town. However, no one here heard anything about such a brand and, despite the good product, the support of the management company, the business did not go. Therefore, you should not get involved with unknown brands - it is better to follow the beaten track and buy a franchise from a well-known profitable company. ".

01 June

Hello! In this article, we will tell you about starting a franchise business.

Today you will learn:

• Why running a franchise business is beneficial;
• What is the best franchise business to start.

What is a franchise

Let's start with the main thing - the definition of a franchise.

Franchise - a set of benefits that allow a legal entity or individual to use the company's brand.

More simple:

Franchise - the right to use the brand, technology and experience of a well-known company.

Whoever buys a franchise is called a “franchisee”. Franchiser - the one who grants the right to use the brand.

That is, the very concept of a franchise implies the purchase of the right to work under the name of a well-known company. At the same time, you can buy not only a brand, but all marketing and strategic developments that will allow you to launch a business.

Also, most companies are responsible for equipment, selection of a place for doing business, development of the initial advertising plan and many other things that make it successful.

Advertising is worth talking about separately. Since in most cases you buy a ready-made brand, they have already taken care of the market. And the developed network of franchises allows advertising the same product by several businessmen, which significantly reduces the cost of promotion.

The franchise system is widely used in public catering. The most prominent representative is McDonald’s. The company has been promoting its services under a franchise model for over 30 years.

Types of franchises

Specialists subdivide several types of franchises:

1. Classic... The most popular type of franchise in Europe. The owner pays the initial amount for the purchase of the franchise, regular contributions in the form of a% of the profit and acts under the close supervision of the franchisor.
2. Free... The most popular type of franchise in Russia. The owner gets almost complete freedom of action, an approximate plan of action for doing business and minimal fees. It is characterized by an average down payment.
3. Import substitution... Creation of products that are similar to well-known brands.
4. Full construction... When choosing this model, the franchisor creates the business himself and transfers it into the ownership of the manager for a certain fee. The profit is divided depending on the terms of the contract between the manager and the franchisor.
5. Rent... Almost the same as a turnkey business, with the only difference that the business is leased for a certain period.
6. Master franchise... Purchase of monopoly rights to do business in the region. The franchisee has the right to decide for himself how he does business. He receives only general advice on how to do business, but with this model, the intervention from the company will be minimal.
7. Corporate... The owner simply creates under the brand name, but makes most of the decisions on his own. The franchisor can only tell him about their suppliers, the main directions of the company and the range. The businessman is responsible for everything else.

The chosen type of franchise will depend on the number, experience and aspirations of the franchisee.

At the same time, the free type of franchise is more typical for the Russian economy, in which the franchisor is only interested in an initial payment - buying a brand. For this he gives a recipe for a successful business, as well as contacts for most of the suppliers.

This collaboration almost ends. The franchisee and the franchisor will only discuss together issues and promotion of common goods and services.

But Europeans often choose the more strict classical model due to the fact that it provides constant assistance from the franchisor, and, accordingly, supervision over the quality of business. With this option, freedom is lost, and with it the probability of making a mistake.

Pros and cons of the franchise

In order to study the positive and negative aspects of starting a franchise business, you need to touch on statistics. Official figures say that about 80% of aspiring entrepreneurs drop out in the first year. And of the remaining 20 - 15 after 5 years of work.

Of course, these statistics consider the sale of rights, the purchase by large companies and other deals beneficial for a businessman to be a failure. But the general tendency is as follows - about 1/3 of real businesses are successful with start-up entrepreneurs.

And from here follows the main positive side of the franchise - reliability. In fact, after the purchase, you get a ready-made recipe for how to start a working business. With all suppliers, a choice of products and services, a long-term, analytical team and a clear one, including all the little things, right down to the building heating requirements.

When you buy a franchise from a well-known brand, you will have a clear plan for how to make a successful business that will generate profits over several years.

According to official statistics, novice entrepreneurs who have chosen the franchise model as their business development save up to 5 years on the development of their own company.

Of the implicit advantages, you can still highlight:

• from a franchisor company;
• Availability of proven suppliers;
• Advertising campaign within the brand.

Franchise statistics are somewhat different from those in real business. About 60% of franchise businesses are successful. At the same time, 30 out of 40 were at a loss due to their own mistakes, due to deviations from the franchisor's business plan.

And the remaining 10% chose the wrong region for business promotion. That is, if you choose the right region and fully follow the advice of the company, then the business will bring a stable income.

But in addition to the pros, there are several significant disadvantages that most aspiring businessmen can weed out.

Minuses:

• Price;
• Ease of doing business.

And if everything is clear with the first - for example, opening a small McDonald’s restaurant may require up to 30 million rubles, with the second everything is not so simple.

On the one hand, everything is simple - there are working tips that must be followed, and the profit will not be long in coming. On the other hand, an entrepreneur will not gain experience trying different strategies, “getting big shots” and coping with crises.

A franchise business is more like a game of pre-agreed rules - do it and get a stable business and income. After a few years, you may be allowed to “change the menu” or “add a small store”.

And now we have reached the limitations and requirements that most franchisors impose on potential buyers of the brand.

If we refer to the most popular franchised fast food, there are a lot of requirements:

• To buildings;
• To the staff;
• To the menu;
• To the franchisee himself.

And also many restrictions like: do not change the menu, train the first employees strictly from the franchisor, buy equipment from such and such a manufacturer, purchase only from these suppliers for the first time, etc. Each has individual conditions, but the essence is approximately the same: do the same, as famous brand representatives.

But at the same time, you should not think that such actions according to the template will be unprofitable. Most large companies that are concerned about their franchisees being successful conduct analytical work, during which they identify the needs of the region, specifics, which product should be launched, what is the most convenient time for this, etc.

The team will carry out a full analysis of how to make a brand successful in an average city or megalopolis, what is more profitable to launch in central Russia, and what is in the southern regions.

Is it worth starting a franchise business

From the previous point, it became clear that the franchise has both its pros and cons.

Summarizing all this, it can be noted that:

If you find a good franchisor and follow his advice, you will get a successful business that will bring stable profits 90% of the time. At the same time, a number of restrictions are imposed on the businessman, which are set by the franchisor company, in an attempt to protect him from wrong decisions.

It follows from this that running a franchise business is a great way to start your entrepreneurial journey. But working with big brands will require a significant amount of money. Therefore, it is better to start your own business with cooperation with medium-sized franchisors.

For more experienced businessmen, working with large franchisers can save a significant amount of time on project promotion. From 1 to 3 years to get your market share and from 2 to 4 years to be able to fully gain a foothold in it.

How to start a franchise business

Starting a franchise business is easy enough. It is enough to go through 7 steps, after which you can have a legal and highly profitable business.

Step 1. Defining the sphere

Unlike the countries of Europe and America, in which fast food dominates steadily and confidently, franchise promotion in the retail sale of non-food products is more popular in Russia.

Then there is the provision of various services, and only after that there is fast food. Food retail occupies 3% of the total volume of the Russian franchising market.

Let's consider each of the possible areas separately:

• Retail.It represents interaction with major brands that operate in the region. In fact, this will be the purchase of wholesale consignments of goods and retail sales. Outstanding representatives who provide their goods for sale are Lacoste, Oodji. Those who send the purchased goods to their franchisees - Sportmaster, Sela, etc .;
• Catering.Everything is simple here. Either you rent a place at the food court and sell food and drinks under the brand name of a well-known brand. The franchisor chooses the menu, he also provides a supplier base, checks the premises and trains personnel. The most famous representatives are Subway, McDonalds;
• Production.The most profitable and least liquid way to invest in a franchise. It is possible to produce under a franchise: vegetables, flowers, bakery products and other similar products. The franchisor most often participates in the creation of production, shares the recipes for creation and its channels for selling products in the region. A prominent representative of the production franchise is Pokrovskie bakery;
• Clothes and footwear of famous brands.Opening stores of famous brands is quite a profitable business. You will be selling a range of well-known products in your region, while receiving full advertising support from the franchisor company. Basically, you are just opening a branch store. Famous brands - H&M, Timeout.

The choice of the field of activity entirely depends on the preferences of the businessman. In each of the segments, you can find both franchises with a small entry threshold - 100-400 thousand rubles, and large giants - from 20 million rubles per brand. At the same time, the most difficult is the sphere of production, and the least demanding of the qualifications of a manager is the sphere of retail trade.

Step 2. Choosing a specific franchise and training

After choosing a niche, you will need to carefully study all the franchise offerings. To do this, you can use our. Your profit directly depends on what choice you make.

The qualifications of the franchisor will depend on:

• Enterprise profitability;
• Stability;
• Competitiveness;
• Demand.

As mentioned earlier - with a good franchisor, you will get a working recipe for a business that will bring long-term income. But the bad partner can only take the money and give a rough plan, which contains general instructions on how to create a business.

Signs of a good franchisor:

• Brand awareness;
• Availability of a training center;
• Study of the region;
• Availability of a supplier base;
• Clear rules and requirements;
• Real figures of profitability;
• Investments in advertising.

All these points show the relationship of the franchisor to the buyers of the franchise. It makes no sense for a well-known brand to sell a low-quality product - including its name. The Learning Center testifies that some of the secrets of how the company does business have not been made public and will have to learn more.

A good analytical team that researches the needs of the region and builds a supplier base speaks about the quality of business. Only those who stake on results can afford to invest in information and its analysis.

The presence of clear requirements is the constant quality of a good franchisor. Since he is interested in the franchisee developing and not making mistakes, he will protect him by setting clear requirements.

It also aims to maintain the brand. And investments in advertising mean that, for the most part, at the expense of the franchisor, a businessman will be able to get good advertising for his business and quickly attract customers.

Step 3.preparation of documents

At this stage, you should choose the organizational and legal form in which you will work under the franchise. There are two options for doing business: like or.

Doing business as an individual entrepreneur has a number of advantages:

• Ease and speed of opening.

But at the same time, you will be responsible with your property for the obligations of your IP. Moreover, even if you work at a loss, you will need to pay 35,000 a year to the social security fund.

Also, an individual entrepreneur cannot hire a large staff of workers - which can significantly slow down business development.

At the same time, the LLC has one significant plus - in the event, liability can only be recovered from the company's property.

At the same time, the LLC has a more complex and accounting system, and has a laborious procedure for state registration.

When choosing an organizational and legal form, it should be borne in mind that when choosing an individual entrepreneur, all types of business related to cigarettes, etc., will not be available to you.

Step 4. Search and refurbishment of the premises

In any business, premises play a huge role. That is why every franchisor has a clear idea of \u200b\u200bwhat it should be for successful business.

When examining the various franchises in the conditions, the requirements for the premises will be indicated each time.

Most of them:

• Volume from ** square meters;
• The presence of a water supply;
• Compliance with all safety standards;
• Various specifics. Vary from business to business.

Some allow their franchisees to rent premises, while others insist that it be their own.

Most franchisors operating in different regions of Russia have their own databases of suitable premises for each city. You can also use consultants from franchisors who will find a place for business in a short time. This is one of the benefits of working with medium and large brands.

Step 5. Purchase of equipment

One of the easiest steps. The franchisor issues contacts of all suppliers, or completely independently deals with the purchase and delivery of equipment. Also, specialists can deal with the installation of all equipment. About 80% of all costs are spent on the premises and preparation of equipment before starting your own business.

At the same time, if you work with European brands, you will need to purchase rather expensive equipment, and it will not be possible to buy Russian counterparts. And because of the high price, the quality of the equipment will be adequate.

For example, German equipment purchased by McDonald's franchisees has a warranty of 10 to 30 years.

Step 6. Preliminary preparation

The preliminary preparation process includes: buying goods, preparing premises, conducting an advertising campaign and a test launch of a store / restaurant. This process will be supervised by the franchisor's specialists: their main task is to find flaws and eliminate them even before launching, along the way teaching the businessman the various intricacies of doing business.

The preliminary preparation of the business can take from 1 to 3 months.

Step 7. Starting a business

After preliminary preparation, it's time to start a business. During the first time after the launch, experts and analysts of the franchisor will closely monitor what indicators the store / restaurant shows. After a few months, the franchisee will have greater freedom, for example, to vary the store's assortment.

After 1-2 years have passed, the franchisee will be able to completely take control of the business and choose suppliers of goods, train employees on their own and build a sales line as it sees fit.

That is, over time, any franchisee gets much more freedom, regardless of the chosen form of franchise. Even with the classic model with such a tough franchisor as McDonalds, after 1 year you can change the menu, after a year and a half - create your own dishes, and after 2 - on the territory of the restaurant and next to it.

All about paying the franchise

Now let's talk in more detail about financial side question.

When selling a franchise, the franchisor can choose two ways:

• Require only a down payment that will cover all the costs of helping to start a business;
• Require a down payment, as well as monthly (quarterly or annual) contributions in the amount of% of the business.

The franchise fee is called a lump sum. This is a one-time payment that is calculated from all the costs that the franchisor will have to incur to open a business, as well as payment for its services.

The monthly fee for using a franchise is called royalty.

There are 3 types of royalties:

• Turnover percentage;
• Percentage from the markup of goods;
• Fixed royalty.

The most commonly used percentage of turnover is from 5 to 30% monthly withheld from the amount of income, depending on how profitable the business is.

At the same time, as mentioned earlier, if the franchisor sets only a lump-sum fee as a franchise fee, this means that he will be less interested in developing your business.

It will be enough for him to receive a large amount once, give the business plan and leave in an unknown direction, leaving the businessman to deal with his own project on his own.

On the other hand, large royalties can negatively affect the profitability of a business. True, most franchisors take into account the profitability of their projects, therefore they set quite adequate rates in the amount of 5-15% of profit per month. This makes it possible to earn money from the entire branch network, and at the same time leave them a significant amount of profit.

There is one more contribution - advertising. Thanks to him, an advertising budget is formed, which is spent on promoting the whole brand in all regions. Thus, by paying from 10 to 100 thousand rubles a month, depending on the volume of business, you will be able to receive full-fledged advertising in your region, as well as increase brand confidence all over the world, which also has a positive effect on sales.

Examples of franchises

In the end, we will consider 3 large franchises in three different areas: McDonald’s, Pyaterochka, Lacoste.

McDonald's.

Having appeared on the Russian market relatively recently, the large catering giant began to dictate its own rather harsh conditions.

In order to obtain the right to use the McDonald's franchise, you must:

• Have capital from 10 to 40 million rubles, depending on the city and the size of the restaurant. At the same time, at least 50% of the funds must be owned and not borrowed. You can pay the remaining 50% within 7 years at the minimum interest of the company itself;
• Complete paid training. Training price - $ 10,000;
• Have extensive experience in business or catering.

In fact, in order to open a McDonald's franchise, you must either be an accomplished businessman or have extensive experience in the catering industry.

McDonald's lump-sum contribution is 45 thousand dollars. Royalty - 12.5%. The payback period is 3-5 years.

Pyaterochka.

Retail grocery stores in Russia prefer to develop organically - not by selling franchises, but by independently expanding production areas and absorbing regional retail chains.

But X5 Retail Group - owners of Pyaterochka, Perekrestok and Karusel stores - decided to create a franchise network in Russia grocery stores with fairly loyal conditions.

Conditions:

• Own premises (long-term lease is suitable);
• Positive business reputation;
• The presence of a trading floor from 100 sq. m.

Lump-sum contribution - 750,000 - 1,000,000 rubles. There is no royalty legally. But there is one important detail here - the franchisee, according to the contract, receives a commission in the amount of 14 to 17% of the store's income. A fairly profitable scheme for aspiring entrepreneurs.

The business payback period is 1.5-2 years. A great option for businessmen with no experience.

Lacoste.

Most controversial on this list.

There are few requirements, but they are quite strict:

• Own premises - 100-150 sq. m .;
• Experience in retail sales and own clothing stores.

At the same time, there are no lump-sum fees and royalties. You will buy branded clothing, footwear and accessories and sell them in your store. The franchisor will need to pay for the products and the required advertising percentage.

The payback period depends on the businessman. The freest franchisor, only for the most experienced entrepreneurs.

These three franchisors show a completely different approach to franchises. One is a classic European with tight boundaries and great strategy. The second is a typical Russian, with a rather strange approach in the form of agency deductions. And the third is an American, with favorable conditions for himself, who is looking for an experienced partner.

Each franchisor is an individual and a company with decades of experience behind it. Consider all the features when choosing a partner, down to the size of the room and the severity of the conditions.

Conclusion

Starting a franchise business is the most profitable way to start your own business for aspiring entrepreneurs. In Russia, the most demanded franchises with an investment volume of 400 thousand to 4 million rubles.

If you have such capital, then literally in 1.5 - 3 years you will be able to recoup all investments and reach an income of 40 to 500 thousand rubles per month.