Routing Biz Success Via Franchising

Accessibility of diverse business opportunities is creating a lot of confusion among aspiring entrepreneurs to zero down on a single business opportunity. To add to this confusion is the increasing trend among brands whether service or product to opt for franchise route for expansion. No doubt taking up a franchise business opportunity is always preferred over opting for an independent business, still it is difficult to zero down whether to get associated with service franchise brand or retail franchising one. Franchising provides all the know-how and expertise of running a business successfully, which an independent business can never provide. From selecting the right location to recruiting the staff and from designing the logo to creating a brand image, everything will be done by the business owner which in not a case with franchising. No doubt franchising is successful business formula yet selecting the right business opportunity needs lot of care.
Franchising is divided into two major categories: Business or service franchising and the second one is Retail franchising. The brands that are providing services to the consumers are called service franchises and the brands that are providing product or are selling products or merchandise from a retail outlet and is expanding via franchising is called retail franchising.
The major sectors or industries that may fall under service franchising include food and beverages, education, health and beauty, play schools and activity centres, pre-school education, IT education and training, business services, consumer services, car care services and school education.
Retail franchising mainly include industries like apparel, footwear, jewellery, pharmacies, FMCG, consumer durables, furniture, electronic goods, home appliances and so on.
Some factors need to be considered before taking up a final call on the franchise business opportunity by the aspiring entrepreneur. Right business selection would definitely decrease the risk of failure and would elevate the levels of success. The article presents some measures; if taken care of at the initial phase of selection of business opportunity, the percentage of success is higher at least, if not guaranteed.
Search and research: Talk to various business owners for experience and knowledge in the areas that interests you. Understand the need of the market and ask questions.

Analyse yourself: It is very important to find out if you are a business person or not. Write down on a paper describing why you want to take up the business opportunity at all. Know your marketing and sales qualities and understand your family obligations.

Check your finances: Take a note on the kind of investment you can make. After having analysed the budget search for the business opportunities that suits you.

Check business model: Search for various business models available in the market. Make your mind if you would like to opt for franchising or independent business.

Select right industry: Having short-listed the industry for which you want to take up a business talk to experts and gather as much information as possible. Evaluate the opportunity in terms of investment required in terms of money and market value of the brand.

Take financial assistance: Talk to your accountant about income and profit projections made by the franchisors and talk to a solicitor about the franchise agreement.

Zero down on a wise decision: Analyse everything before taking up a final call. As you will be putting in your hard earned money in the business so do not just rush into the decision. Be 200 per cent sure, before making an investment.

Conclusion:
The availability of diverse business opportunities in franchising as well retail franchising on one hand offers plenty of prospects where as on the other creates lot of confusion, leading to lot of confusion. A self analysis followed by adequate search and research is the best foot forward for right business opportunity.

Franchising Loan What’s The Difference Between Franchise Finance And Other Business Loans

It’s a great client question: What in fact is the difference between a franchising loan and a regular business loan when it comes to arranging franchise finance in Canada?

The answer? There are some differences, but you just might be surprised at the similarities when it comes to comparing the two. Let’s explain.

When it comes to the ‘ players ‘ in your finance loan, it’s pretty simple. Contributions are required from you, and your lender / lenders! In Canada those lenders are specialized franchise financing firms, banks, and third party commercial finance companies. While it is extremely difficult in Canada to obtain full financing for your franchise via a Canadian chartered bank the good news is that thousands of franchises are financed via the Government Small Business Loan which can provide funding up to $ $350,000. That’s not chump change! . And when you hear what rates and terms and structures are required you’ll be even more pleasantly surprised.

Clearly franchising fits into the area of the SME sector of Canada, and for that reason a lot of the challenges that the franchisee faces revolve around the same issues faced by any other start up. Yes , we agree that you’re acquiring ( hopefully ) a proven business model but the early stage financing required to get you to a turnkey ‘ in business ‘ stage is still viewed as placing a heavy onus on the entrepreneur to come up with a decent portion of the capital yourself .

Franchising, as well as any other type of business requires two key components for initial capital… a ‘ plan ‘ and ‘management expertise “. And that plan by the way is known as the ‘ business plan ‘ – which is simply your well thought out road map to financial and operational success.

The type of financing that you obtain when you finance a franchise revolves specifically around ‘ use of funds ‘, another common term for any other business financing. In your case that might be real estate, construction, equipment and fixtures, leaseholds, and some opening inventory if you have a product as opposed to a service franchise.

We mentioned the Govt business loan previously as a great conduit to get you approved for your new business. But we point to out clients that that loan program only covers equipment and leaseholds, so items such as the franchisee fee and opening inventory are not financeable. We wish they were… but they’re not!

We have referenced the fact that while Canadian banks provide millions every year for entrepreneurs in the franchise sector via the specialized BIL loan, they in general are reluctant to finance the business outside the Govt program. So discussions around bank financing quickly gravitate to personal collateral, home equity collateralization, etc. It’s simply not the optimal way to go if you want to separate your business life from your personal life.

Another strong similarity in franchise finance when compared to other business financing is the fact that a strong emphasis is placed on your personal financial history. This is typically documented by your credit report and a solid amount of emphasis is placed on this report. In Canada this report is in effect a scoring system and a good score of ‘ 650’ is required.
Simply speaking, the bank or any other commercial lender wants to know you will run your own business in the same manner as you have arranged and run your personal finances, and that of course makes sense – especially if you’re the lender!

So as we have seen many of the concepts and lender views around any business finance loan or proposal pertain to franchise finance, with some nuances / differences. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance assistance.

All About Franchising And Starting Up A New Franchise Business

Copyright 2006 Peter Hayes

Franchise business opportunities are expanding rapidly. If you look at the most famous franchise in existence today is the McDonalds corporation. McDonalds has established itself around the world and is one of the leading business organizations. Opportunities in franchising continue to develop as the franchise industry develops.

What is a franchise?

Information on the Franchise Business

A franchise is a mirror image of an original business idea. When a business has become successful the opportunity arises to duplicate the success in other locations. When an individual purchases a franchise opportunity, they are purchasing is the right to repeat the original business operations in another area. To help them achieve success a franchisee receives complete instructions on how to achieve the success achieved by the original business. They get an established and proven business plan and marketing plan on which to build their new business.

A franchise has been granted the authorization to sell or distribute a companys goods or services in a certain geographical area. For example, a restaurant or coffee shops marketing area is limited, usually to people in the immediate local area. Therefore, creating another restaurant or coffee house based on the original business in a different area would be considered a franchise.

The original business developer determines the formula for producing the same result achieved by the original business and how this formula can be repeated in new locations. This formula is packaged and sold as a franchise. This package is sold to interested parties who can achieve success simply by following the proven formula.

Why Do Businesses Sell Franchises rather than Expanding their own Business?

What is the advantage of developing a franchise as opposed to simply opening the business in multiple locations? It is quite possible to open a number of restaurants in one city or county or even within a state. However, the time requirements and energy required to do this is extensive. Franchising offers th possibility to expand the business and have others on board to share the burden.

It would be impossible for someone like Roy Croc, who developed McDonalds, to run each individual McDonalds restaurant around the world. To expand your business without running it into the ground, you need quality people who have an interest at your own bottom line.

Information on Buying a Franchise Business

Many people would like the freedom to start their own business. However, they may be new to the business world. Or they may not be confident of their ability to develop a business. Or they may not have a business idea that they are confident in.

The opportunity to start a business that has a proven success record and an established plan for achieving a similar success is what make franchising attractive to new business owners.

This is beneficial to both the original business developer and the entrepreneur. The business developer makes a profit by selling his system and the entrepreneur gains the knowledge from an experienced owner with a successful business. This increases the opportunities for the entrepreneur, which allows for a greater chance of success.

Should You Start a New Business or Go the Franchising Route

Starting a business is a huge risk, but the payoff could be huge if your business succeeds. However, many are wary about starting a business from scratch because they think that it’s riskier compared with going into the franchising business. Some people think that buying a franchise is more advisable because there’s an established market. There are benefits of starting your own business from the ground up; for instance, you don’t have to worry about franchising fees or royalties. However, you might have to work extra hard before you get significant return on investment. This could be a huge disadvantage. This is not to say that it’s guaranteed that you’ll get rich instantly with a business franchise; it’s like any type of business, so this means there are huge risks as well. The difference is the fact that you’ll be working with a business that has a reputation and a customer base. Some people think profit from franchising is considerable because you’ll be working on a tried and tested business idea. You don’t have to work too hard on increasing brand awareness because people are also more familiar with the products or services that you offer. Aside from the potential profit, starting a franchise gives you more flexible hours. You can now have more free time to spend with your family and improve your lifestyle. If you are not sure whether or not you should start a new business or invest on an established one, you could consult a business coach. These people can tell a clearer picture and inform you about the risks and rewards of choosing either one. If you choose to buy a franchise, make sure that you read the company profile and see if you’ll have greater return on investment with it. Careful research goes a long way, and you could lessen the risk by choosing a franchise that’s under an industry that you’re more familiar with. If you want to try your luck on a new business, you should research on market trends and try to offer something new. There are advantages and disadvantages of starting a new business or buying a franchise. You need to assess your particular situation and see which one is more suitable so that you can be successful. If you want to learn more information on the subject, you can go to entrepreneur.com or franchises.about.com.

Could Franchising Be The Business For Me

Most people are familiar with franchising. For the benefit of those who are not, according to http://wikipedia.com franchising is the system of doing business wherein a franchisor licenses trademarks of a product and tested methods of doing business to a franchisee to receive payment like a percentage from gross per sales or gross profits as well as the annual fees agreed upon, as compensation for the trade secrets shared as part of the franchising agreement. Sometimes legal contracts may vary as to the terms of franchise and may not fit the definition above. Sometimes, the methods on how to do the business may not be part of the franchise or other benefits that other franchising companies give may not be available to others.

The most common franchising companies known to the public would be chain of food stores like McDonald’s which nowadays offer some franchising strategies to reach a wider consumer market. McDonald’s has become a household name since it was able to reach a wider consumer market that is not only limited to the United States and the Americas but to the rest of the world. The success behind McDonald’s becoming a household name and the one of the most known trademarks around the world is due to the system of franchising. Aside from the buildings that McDonald’s rent to the franchisee, it also has a stake on the sales of the franchise and the cost of the supplies charged to the franchisee. To help out in the quality of products and services offered in each food chain, McDonald’s sends a member from the franchisee to their Hamburger University in Oak Brook, Illinois. This is one support benefit that the franchisee would get once they franchise a restaurant for McDonald’s.

Like any business, there are advantages and disadvantages that franchising offer to anyone who wish to venture into it.

Advantages

Popular labels are widely known and are likely to sell. Popular trademarks like McDonald’s are likely to sell than a new restaurant that has not reached a market such as McDonald’s. It is selling a well known product to a consumer market which knows the product being sold.

No need to develop a new product that has not been well researched. Venturing into franchising would allow the franchisee to have access to information that the franchisor have about an existing product and put up a business in a shorter period of time.

Trainings and seminars would be provided to the franchisee about the product. It would be easier to operate and manage the business since there are available trainings and other support methods for the franchisee.

Disadvantages

High standards held by the franchisor raise costs of maintenance in the franchise. Since the standards of the franchisor would definitely be high, sometimes the cost of maintaining a franchise can escalate. Unless the materials used would be second rate and low in cost.

Development of new products might still need to be passed for approval to the franchisor. If the franchisee would like to add a product which they think would be saleable in their market range, the new product has to be approved first by the franchisor and this may take time and it would likely be rejected if it does not meet standards of the trademark.

Profit is limited since the franchisor has stake, most of the time, on the profits of the franchise. Not only does the franchisee have little control of the franchise due to many stakes that the franchisor has on the franchise, the profit of the franchise would also be split between the two. Therefore, there is a limit to how much the franchise would earn.

Even if there are several disadvantages in franchising, still there are advantages. If you think you could handle this kind of business, all I can say is, business is gambling. In any industry there are players and you might be lucky that you would be on top once and sometimes at the bottom. Get to know the game play and start playing to win the game.