WHAT IS FRANCHISING?
There is no prescribed definition of franchising in Indian laws. Be that as it may, in layman's terms, franchising is a strategy for distributing services or products. The Black’s Law Dictionary states that franchise means a license from the owner of a trademark or trade name that allows another to sell an item or service under that name and/or trademark. There are few features of franchising like franchising agreement is a contract-based relationship, the franchisee makes a significant introductory, capital investment to initiate the business activity. A franchise also can be aforementioned as a technique of distributing merchandise or services that involve a franchisor, United Nations agency establishes the complete or brand of the complete, and a franchisee, United Nations agency pays a royalty and sometimes AN initial commission for the correct to try to business. beneath the name of the franchisor and system. Technically it is like, the contract that binds the two parties to serve the same value to the consumers is the called "franchise", but that term most commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is more often referred to as franchising.
COMMON PROBLEM WITH A FRANCHISE
While franchises benefit from instant brand recognition upon opening, there are some common franchise issues you should consider before taking on the investment and calling yourself a restaurateur. In this article, we'll highlight six of the most pressing ones, as well as provide steps on how to address or fix them.
- Higher cost of operation
- Fewer Brand controls
- Minimum Decision-making power
- Brand Dilution
- High employee turnover
- More regulations to follow
Would-be affiliates must be prepared to face a large sum of money to get the business off the ground. Even after paying the one-time opening investment, they have to pay regular fees based on sales and operating costs. Every business goes through its ups and downs during its business cycle. There are different factors that affect the profit of the company. Multi-location franchises having a presence all over the nation, slip up by one individual and could also impact the perception of hundreds or even thousands of other locations.
Independent businesses have full control over every decision made in that business, but the franchise has to follow the instruction. It’s very common for franchisees to have a promotion, rebrand efforts mandated, regardless of input from the franchisor. Basically, Franchise cannot make you your own boss.
Every franchise gives priority to their customers they make their policies according to customer needs. These policies are strictly followed and many new policies are made from time to time according to the change in the market and such policies are mandatory to follow by every franchise.
POSSIBLE SOLUTION FOR PROBLEM
These solutions are generally used severally and generally used along, counting on the particular scenario of the franchisor. Of course, every answer has its benefits and downsides.
As a franchisor, you'll be able to rent the services of a specialized house. the benefits of this kind of practice are that they sometimes have plenty of expertise in several sectors, geographical areas, and kinds of comes. due to this you may enjoy the power that you just might not have in your company and you may not rent and train anyone (with the required learning curve), however, you'll be able to begin seeing results from the start. However, these edges have a value. you may build an enormous investment within the project, in terms of cash and time. in addition, you would like to form positive to not be creating the everyday mistake of failing within the “knowledge transfer”. The transfer of data from the adviser to your company will amendment the result of the project from successful to a failure. The comes become a touch useless if you do not learn something from the processes, technical data, and solutions projected by the consultants. A project shouldn't be an occurrence, however a chance to resolve a particular downside whereas your team learns within the method.
These forms of studies are terribly convenient because the reports have everything already ready and you'll be able to get them instantly or terribly quickly. it is a terribly replicable method, and counting on the extent of knowledge needed and therefore the question you are attempting to answer, a report could also be enough to resolve it. However, what if we wish to play with the knowledge, amendment some components, or iterate? There are many reasons why a report might generally not be counseled (of course, counting on the case and therefore the style of the report).
In the economic alleviation of 1991, several foreign firms with solid brands have engineered their presence in the Republic of India through franchising. within the welcome and services business, this has been the popular technique for beginning operations in the Republic of India. firms worldwide that employ through franchises embrace Bluegrass State deep-fried Chicken, Domino's pizza pie, give thank God It's Friday (TGIF) for food, Hertz, Avis, and allow vehicle rentals; Radisson, Best Western, and Quality hostelry for inns. pizza pie Hut has opened its few shops and McDonald's has been operational since 1996. Likewise, Indian organizations with solid whole recognition are mistreatment the franchise course to extend business volumes. MRF for automotive tires, NIIT for IT coaching, and Greek deity Hospitals for medical services area unit some models. In 2000, the franchising business in the Republic of India was valued at $ a pair of billion, with a rate of around four-hundredth each year. Some measurements are categorical that franchising accounts for around four-dimensional of India's gross domestic product! With the flow of economic process and also the progression that has hit Indian markets, franchising is all told respects a desirable and tempting alternative, for domestic firms and additionally for foreign firms.
We need to understand that there is a lot behind how a franchise works. It is of the utmost importance to create and have the clarity to open a franchise. There must be a strong contract drawn up to avoid any setbacks in the future and a franchise is a great way to create a business and understand the benefits of the same if managed correctly is the best and greatest expansion of any business that is present, in order to settle in new locations and also benefit the person who creates the franchisee and sells it to a third person. In conclusion, the affiliate helps in the expansion of any business and is also a great way to attract more customers.