Franchising 101- What You Absolutely Need to Know


Franchising has made the world look really small. The well known flavors are now not just restricted to a single town or city but can be enjoyed world wide. Otherwise it would only be a dream for somebody in Asia to wear the fashion of Europe, for the West to have delectable food of the East etc. Globally as well as domestically the system of franchising has something good for everyone.

Franchising basically is the taking of franchisee- the authority or rights to sell the products of some company. Most often it is only those companies who have an outstanding name in the market that go for franchisee outlets. Like a tree expands and grows through its branches that also bear fruits, so do the renowned companies enhance their business (sales) through franchising. Franchising gives them a good opportunity to explore every small town along with overseas markets.

The process to take a franchisee is simple. All one needs to have is the required security amount to purchase the particular franchisee and a good place with an adequate business plan. The amount so taken by the company is for a fixed tenure after which it needs to be revived in order to continue to sale the company's product. This security amount varies with the kind (food, clothes, electronics?) and the market value or the goodwill of the company. is for a fixed tenure after which it needs to be revived. Escalating goodwill of a company entails a surge in the figures to purchase its franchisee. The companies besides the amount are also very particular and cautious about the area and size of the workplace to open their franchisee outlet. While handing over their franchisee to someone nationally or internationally the franchisors (parent company) educate him of their product, terms and conditions, policies and style of working. Most often these companies also give certain crucial tips to prop up the sales of their product. Weekly or bi-weekly advertisements, hoardings and the like are some of the widely adopted measures for it. Once a company sells it franchisee to someone then it is solely the onus and freewill of the entrepreneur regarding the methods he takes to promote his sales. However the prices of all articles are set by the parent company are not subject to modification by the franchisee.

Franchisee business has more or less covered all areas of human needs. Be it food (restaurants etc.), clothes, jewellery, footwear, bags, makeup kits, electronics?franchising is meant for all. It is at individual's discretion to decide which franchisee he wants to go for. This can be fairly decided by a vigilant market survey and an assessment of the standard and tastes of people in that area. For instance it will not be judicious to open a top brand's outlet of expensive clothes in a suburb region where people want to spend bare minimum on their attire. So the kind of outlet to open, in other words franchisee to take is directly proportional to the needs and status of the consumers.

All the franchisees have their suppliers fixed. The suppliers have to arrange to get the material from the parent company and pass it on to every franchisee store that is linked to it.

The 'sale' season is at volition of the franchisee. But the supplier as well as the parent company should be informed before. The prices during the sales season are reduced to half or less than that in order to clear the stock which gets accumulated and is without any serial no.(like there might be just one size or color left of a shirt, trouser etc.). Usually the franchisees do this in order to recover their money and make place for the new stock.

Thus all in all franchising is a good business that is beneficial not just for the one who has taken the franchisee but also for the consumers who get to enjoy the best of everything in their respective town, city or state.

Mansi aggarwal writes about franchising topics.


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