An Introduction to Business Franchising

An Introduction to Business Franchising

Business Development

Atul Goswami

Atul Goswami

51 week ago — 3 min read

The concept of franchising is simple - a company (the franchisor) grants the right to operate its business to an independent operator (the franchisee) in exchange for fees and royalties. The franchisee operates a business using the franchisor's name, products, services, systems, and support. The franchisor provides a comprehensive package of business assistance to get the franchisee up and running. This can include site selection and build-out support, initial and ongoing training, marketing, and access to a continuous supply of proprietary products or services.

Franchising is a popular way to expand a business. Franchising has gained significant popularity as a way for businesses to expand their operations. The franchising industry in India is largely dominated by sectors such as food and beverage, retail, education, and healthcare. There are a number of international franchisors that have successfully entered the Indian market, such as McDonald's, KFC, and Subway, among others. The International Franchise Association (IFA) reports that franchising has been growing at a rate of about 5 percent per year for the past decade and now generates more than $2 trillion in economic activity worldwide.

Also read: Lessons I have learnt from McDonald's franchise model

 

Franchising can be an attractive option for entrepreneurs who want to be their own boss but don’t want to start a business from scratch. It can also be a way for established businesses to expand their reach without incurring the costs and risks associated with opening new locations.

However, franchising is not right for every business or every entrepreneur. It requires a significant investment of time and money, as well as a willingness to follow the franchisor’s operating model and marketing strategy. Franchise agreements typically last for several years and can be restrictive for franchisees. It is important for both the franchisor and franchisee to carefully consider their options and do their due diligence before entering into a franchise agreement. Franchisors need to ensure that their business model can be easily replicated and that they can support and train their franchisees effectively. Franchisees need to ensure that they fully understand the franchise system and its requirements before signing on. Overall, franchising can be a successful and profitable business model for both the franchisor and franchisee if it is approached thoughtfully and strategically.

 

Also read: How does a Franchise Agreement work?

 

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Atul Goswami

Broking Business deals and managing franchise sales and consulting