Every day in the life of an entrepreneur is a day to learn new things and today we are giving you a beginners’ guide to all things franchising, so let’s begin with the definition of franchising.
Franchising is an agreement where (the franchiser) grants another party (the franchisee) the right to use its trademark and trade name as well as a certain business model to produce products and services according to certain specifications.
The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty and gains the following:
(1) Immediate name recognition.
(2) tried and tested products.
(3) standard building design and decor.
(4) detailed techniques in running and promoting the business.
(5) training of employees.
(6) ongoing help in promoting and upgrading of the products.
There are so many entrepreneurs who don’t believe that franchising can work for them and yet risks with owning a start-up are obvious. It is important to blatantly state that the apprehension to buying a franchise in Nigeria comes from a general lack of understanding on what a franchise is and what running a franchise entails and if one is qualified to own a franchise.
So, what is the process of acquiring a franchise business? Essentially, a franchisee pays an initial fee to a franchisor and also royalties to the franchisor and in return for this payment, the franchisee gains the use of a trademark, ongoing support and the right to use the franchisor’s system of doing business and sell its products or services.
The combination of a well-known brand name and its ability to market itself cannot be under estimated; this means that you have unsolicited access to an enthusiastic customer base, an inflow of business from the day you open your doors to the public and also evident return on investment from day one of your business launch.
In addition to a well-known brand name, buying a franchise offers many other advantages that aren’t available to the entrepreneur starting a business from scratch. Perhaps the most significant is that with a franchise you get a proven system of operation and training on how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected their daily operations through trial and error.
Another upside to owning a franchise is that you get mentor-ship and important training which helps to maintain a quality standard in your product and services and avoid the mistake of under-serving customers and ultimately ruining your business.
There is also something to be said for franchisees benefiting from the established brands they franchise from – you gain a database of suppliers of materials needed for the product or service you are selling, advertising as well as lease term agreements and preferred locations for your business.
If you have not decided on the type of franchise that you want, you can come in and consult with us for more information about the types of franchise that will be best suited to your needs or if you are interested in owning a franchise business but you don’t know what to do next Click here