The reason or consideration of a franchisee when entering into a franchise agreement is in fact the right or “privilege” to use the franchisor`s system, its trademarks and ownership marks of its franchised business and commercial know-how. With the payment of the franchise fee, royalties and other royalties stipulated in a franchise agreement, the franchisee is able to “choose the brain of the franchisee,” use its tested and cost-effective system, and use its already known brands. You can ask, “Why is someone on Earth going to register as a franchisee?” As severe and painful as your franchise agreement may seem, it is always advantageous for the franchisee. First, the strict language is imposed in a franchise agreement in favour of the parties. The franchisee is therefore assured of the uniformity of the system and the operation of the franchise. Second, the franchisee will benefit from the exclusivity of the use of the franchisor`s protected trademarks, to the exclusion of all others. In addition, it is also certain that the good name and reputation of the franchise are well guarded, due to the strict rules of application, standards and standards that must be sanitized by all franchisees for the duration of the franchise. Finally, when entering into a franchise agreement, the franchisee does not need to start from scratch and experience “congenital pain” when starting a business. The franchisor has made all the mistakes in the past, and what it presents to the franchisee is the proven way of doing business. In fact, a franchisee doesn`t even need to have good business sense. All it has to do is follow the card or “Walkthrough” (usually as an operations manual) given by the franchisor to succeed. And in most cases, franchisees succeed.
A franchise allows you, the investor or the “franchisee,” to do business. By paying a deductible fee that can cost several thousand dollars, you get a format or system developed by the company (franchisor), the right to use the name of the franchisors for a limited time, and the support. For example, the franchisor can help you find a location for your point of sale; Initial training and operating manual and advise you in the areas of management, marketing and personnel. Some franchisors offer ongoing assistance, for example. B monthly newsletter, a free phone number of 800 for technical assistance as well as regular workshops or seminars. While buying a franchise can reduce your investment risk by allowing you to connect to a well-established business, it can be expensive. You may also need to cede essential control of your business while agreeing to contractual commitments with the franchisor. Below is an overview of several components of a typical franchise system. Look at everyone carefully. 1. THE COST In exchange for using the franchisor`s name and support, you can pay some or all of the following fees.
Initial deductible and other expenses Your upfront deductible, which cannot be refundable, can cost several thousand to hundreds of thousands of dollars. There can also be considerable costs to rent, build and equip an outlet and purchase a first inventory. Other costs are operating licenses and insurance. You can also pay a “Grand Opening” fee to the franchisor to promote your new outlet. Continuous fees You may have to pay licensed royalties based on the percentage of your gross monthly or weekly income. You often have to pay royalties, even if your outlet did not receive any significant income during this period. In addition, royalties are generally paid for the right to use the franchisor`s name. Even if the franchisor does not provide the promised support services, you may have to pay royalties for the duration of your franchise agreement. Advertising fees You may need to contribute to the advertising fund. A portion of the advertising fee may earn for national advertising or new franchise owners, but not to target your particular outlet.