What is Franchise definition, meaning kya hai , business ideas, advantages and disadvantages in India
If anyone starts a business in a short time, the franchise can be the best option. Buying a franchise in detail is starting a business by using the brand name of the original company in your state. This requires an agreement with the company. In order to buy the franchise, you need to persuade the company. The company will come to an agreement where you cannot alter the price and technical aspects of the product.
Various types of franchisee
There are three types of franchise depending on the nature of the business. The details of the three types are given below.
- Business format franchisee
This is the most common type of franchise. In this type, you are the brand to the company. The company will guide you through the way to business with them.
- Product distribution franchisee
In this type, the franchiser agrees to sell its product to the franchise. Here the company does not guide you regarding business. The company acts as the seller, though you can use its brand name. The petrol pumps are as the best example of this kind of franchisee.
- Product manufacturing franchisee
In this type the company allows the franchise to make the product or services. The franchise can use the company’s brand name, logo, and sign. For example, drinking water companies opt for this type of franchise.
How one can start a franchise business in India?
- Fees and percentage
- There is a fixed fee that is set by the company for its franchisee. The fees vary with every company. The franchise buyer can lower the fee. The negotiation will depend on the mode of your business.
- After buying the franchise, the company will allow you to sell the product. Sometimes, they take a percentage of the profit that comes after selling the service. The fee and the percentage of the profit entirely depend on the agreement you had with the company.
- Required documents for opening a franchise
- To acquire the franchise you need to have a Franchise Disclosure Document. The document will include the details regarding the franchise from how to run the franchise to what is the business proposition.
- Another important document is the franchise agreement. The agreement is kind of a letter signed by the company. The primary purpose of the company is to accept the terms and condition of the company. On the basis of the terms and condition related to the business, the agreement is written.
- Fees and percentage
Terms and conditions for acquiring a franchise
- In order to get the franchise, you have to pay the amount the company asks from you. Apart from that the company also takes into account the location where you are starting your business. Therefore, you need to choose a proper place.
- You need to make a business proposal for your franchise. In the proposal, the details of the location and the mode o service that the franchise is going to offer will be given. Therefore, to keep proof you need to prepare an agreement.
- After this, you need to inform the company regarding the location of the business, the detail of the decoration, the location from where you bought raw staff for decoration, the kind of decoration, etc. everything needs to be informed to the company as soon as the agreement is done.
- All these above staffs will be given on the bond and signed by the company. Only after signing the bond you can comply with the company’s guideline. The company also needs to rely on the franchisee regarding the mode of business. Believing that the franchise will run well.
- Additionally, the franchise might have to pay a percentage of the profit to the company. If it so then it will be clearly stated on the agreement. For instance, if you take franchisee from Pizza Hut, then you have to pay to Pizza Hut about 5 to 10 percent on the sale of each Pizza.
What are companies that give franchisee in India?
- Food and beverage franchisee- There are food and beverage companies that provide franchisee. The companies like McDonald’s, Pizza Hut, KFC, Subway offer the opportunity to open their franchise.
- Franchisee in the educational field- In some cases, there are a few educational or training centers that offer to open franchisee by using their name. Some significant example of this is Main Aloha India, British Academy for English, TMC Shipping, etc.
- Health and beauty related franchisee- Companies that are associated with health and beauty also provide an opportunity to open franchisee by using the name. For example, Jawed Habib, Kaya Ayurveda, Studio 11, etc.
- Retailers and consultancy companies- Retailers companies like Lakme Salon, Cotton King, Florista, etc. give their franchisee. When it comes to consultancy, Brain Checker Techno Service, and Business Doctor are the best example in terms of allowing opening franchisee.
- Other franchise companies- Other than the above-mentioned companies, there are several more companies that allow people to buy their franchisee. For example, ‘Kidg’ for children, ‘Choice Hotels’ for hotels, ‘Green Land’ for home amenities, etc. The companies also provide computer and internet service provider as well as e-worship.
Benefits of the franchiser
Opening a franchise deal with immense benefits, it is beneficial not only for the company but also for the people of the country. The company’s earnings will be increased and the product and service will be easily accessible to the people of the country.
- As a franchiser, if you have made someone your manager and he is quite good at his work, but he does not take responsibility of the loss of the company then, his work cannot be fully trusted.
- On the contrary, the franchise can trust the recipient, because the recipient has a fear of loss.
Benefits of the franchise
- If you want to take franchisee, then the advantage of it is that you can flourish into your business provided the company is good.
- You do not need to spread your branch and market your business. The company itself will do the marketing. Moreover, many people will be attracted to the brand name of the company. You will get a lot of customers without putting much effort.
- Another advantage of buying a franchise is that you do not need to compromise on the value of the product. Even at the time of fluctuation of the market, the product value will remain intact due to the brand name.
Disadvantages of franchise business
- There are a few negative impacts that can be created by the shortcomings in the franchise business. If you bought a franchise, then you need to have a clear perspective regarding finance.
- There will be no limit to your daily work. You need to determine the goal of your life. You need firm support from your family.
- If you have a new idea to speed up the business then you have to consult the idea with the franchisor. You cannot take a decision alone regarding the business.
- If the trade is closed then the franchise cannot do anything to stop it. You will be responsible for the losses you experienced.
Precautions before the opening franchisee
- While you are thinking to open a franchise you need to know the demand of the brand in the market. You need to understand how the company works and the fees they charge.
- Apart from that, you need to have a clear idea about the benefits that you may get as well as disadvantages. It is crucial to avoid problems in the future.
- Before opting for opening a franchise, you need to test your qualification and ability. Both of these are essential to progress in the business.
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