Tom’s Franchise Information Blog
Franchisingis the practice of using another firms successful business model. The word ‘franchise’ is of anglo-french derivation. The success of franchisor is the success of the franchisees. Franchisee has a direct stake in the business. Characteristic of businesses which works best for franchisee are: businesses with a good track record of profitability, businesses which are easily duplicated. So, if a person wants to start a business then he or she can go for franchisee offers. There are number of dealers and distributors in the market which are searching for franchisee. Even number of people who wants to start their own business are also searching for franchise offer. A franchisor is expected to offer assistance in various forms such as: organizing, training, merchandising, and marketing, etc. Franchising basically involves a contractual arrangement between a franchisor (a manufacturer, a wholesaler, or a service sponsor) and a retail dealer. It allows the franchisee to conduct a business under an established name and according to a given pattern of business. In this business one has to follow the direction given by the franchisor.
BENEFITS FOR FRANCHISEE
1. It is beneficial for franchisee as an investment is usually made into a proven business.
2. One can start his or her business, develop a customer base, and experience profitability quicker.
3. There are known strategies which will help in the business.
4. Owner training is also available.
5. The biggest merit of franchising appears to be the reduction of risk.
6. One usually gets better deals on supplies because the franchise company can purchase goods in bulk for the entire chain.
7. Customers are dealing with a firm which they already know.
SELECTION OF THE RIGHT FRANCHISE
1. One can go for such a business if (more…)
Franchisingis the practice of using another firms successful business model. The word ‘franchise’ is of anglo-french derivation. The success of franchisor is the success of the franchisees. Franchisee has a direct stake in the business. Characteristic of businesses which works best for franchisee are: businesses with a good track record of profitability, businesses which are easily duplicated. So, if a person wants to start a business then he or she can go for franchisee offers. There are number of dealers and distributors in the market which are searching for franchisee. Even number of people who wants to start their own business are also searching for franchise offer. A franchisor is expected to offer assistance in various forms such as: organizing, training, merchandising, and marketing, etc. Franchising basically involves a contractual arrangement between a franchisor (a manufacturer, a wholesaler, or a service sponsor) and a retail dealer. It allows the franchisee to conduct a business under an established name and according to a given pattern of business. In this business one has to follow the direction given by the franchisor.
BENEFITS FOR FRANCHISEE
1. It is beneficial for franchisee as an investment is usually made into a proven business.
2. One can start his or her business, develop a customer base, and experience profitability quicker.
3. There are known strategies which will help in the business.
4. Owner training is also available.
5. The biggest merit of franchising appears to be the reduction of risk.
6. One usually gets better deals on supplies because the franchise company can purchase goods in bulk for the entire chain.
7. Customers are dealing with a firm which they already know.
SELECTION OF THE RIGHT FRANCHISE
1. One can go for such a business if (more…)
Franchise financing is an integral part of the Canadian entrepreneur’s challenge of obtaining and building a success Canadian franchise. As most Canadian business owners quickly discover, franchisors do not provide direct or indirect financing in the Canadian marketplace. This leaves the business owner essentially on his or her own to generate the capital they need from chartered banks, finance firms, and other institutions.
It goes without saying that the budding entrepreneur needs to first make a significant investment in general franchise knowledge - i.e. the pros and cons, as well as of course focusing on financing the franchise.
Franchises in Canada are product and service related. When you purchase the franchise you should have strong level of confidence that the concept is proven and successful, as you will be trying to replicate that success based on the products, services and brand awareness of the franchisor.
Franchisees are encouraged to do a proper level of due diligence based on that availability of information with respect to the business success of the franchisor. If you are considered a franchise that is owned and run by a large well know public company - think McDonalds! You of course have the ability to carefully review the financial statements and management commentary that is available to anyone by virtue of the companies listing on the public stock exchanges.
The good news about franchise financing and the risk that the business entrepreneur takes is that there is a significant amount of disclosure required by law to you as a franchisee. In Canada, as well as the United States you should have the ability to get a copy of the franchisors financial statements. If you don’t feel qualified to read and interpret a financial statement you should use the services of a trusted franchise financing advisor, or ev (more…)
