Franchising is one of the common ways of doing a business. Franchising a business means an owner or franchisor sells the right to his/her business name, model, and logo to a third party retail outlet, which is owned by a third party operator called “franchisee.”
Essentially, franchisees pay ongoing royalties and initial fees to the franchisors. In return, the franchisees gain the use of continuing support from their franchisors, and most importantly, the right to own and use the franchise system of selling products or providing services.
One of the greatest strengths of franchising is that it brings many independent retailers and marketers together who are using the same business concept and trademark. This affiliation not only improves brand awareness but also enhances uniformity in fulfilling customer expectations and benefits pooled advertising.
However, it is essential to understand that successful franchising needs a robust plans. No matter how famous a particular brand is, creating aplans for franchise is the only way to reduce the ever-present challenges and failure risks. Whether you are interested in opening an American shoe outlet or introducing a brand of Italian cosmetics, you cannot deny the importance of a plan for a franchising business.
Put simply, franchising plans can help entrepreneurs get external capital for expenses that may include start-up expenditures, tenant improvements, and franchise fees. Most importantly, an entrepreneur needs a franchise business planning for the same reason a lender or investor requires one: he/she needs to have a roadmap that can take the franchising business on a profitable and sustainable path.
