Franchiser would want to request for a reasonable franchising fee. However Franchisee may want to see a payback period of within a two-year period. Then how the Franchiser and Franchisee would get their mind meets.

Franchisee therefore needs to have a financial workout and a realistic outlook to start the Franchise business. You would ask how much financial commitment do you to kick start.

You would have done your homework as to the type of franchisee you would like to go in. Now, let say, you are keen to start and food and drink kiosk. Through your market study you recognize the food on the move would attract consumers with good quality food and yet affordable.

Franchiser for this kind of business would like to have many kiosks spreading over the country but within a 3 to 5 Km radius to have one outlet. You would also establish which location you have in mind and how much the rental would be.
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Franchising is a two-way business model. You may be the Franchisee as of today. When you are successfully implemented and realize your dream, then you are really to have a master Franchisee. As a master Franchisee, you can start recruiting your Franchisee reporting to you. So, with this arrangement, you are acting like “Franchisor”, except you do not own the “Brand”.

Another proposition is that you have a profitable business and can be duplicable for business expansion. But you need someone to put in the finance and operational staff to run the business expansion locally and regionally.

Master Franchisee

To be the master franchisee, you would have experience to run as a profitable business. This would add credit to you and you would also know what has done right and what mistake to avoid in franchising. There would have been some adjustment for local needs as well as enhancement to the products and services. Your sharing as a Franchisee would gain more respect compared to those without real life experience as Franchisee.

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Franchising offers the system of proven strategies and action. Licensing is brand associated with their emotional experience. Licensing allow you to design and develop products in line with the brand’s mission.

Take an example, say you have a brand call “Caterpillar”. Your potential partner for licensing is to extend your brand for fashion and baby products. What image you would like to create for your brand. Obviously you do not wish to dilute your brand.

You set the guideline that for licensing of your brand in producing baby products, limited to clothing, toys, accessories but not diapers. Why not diapers, you may ask. You want to relate your brand to things that bring sweet memories. You would like to relate well to children when they grow older. Photos taken of these children remind you of your brand.
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Franchising is about transferring functions from Franchisor to Franchisee. Franchisor owns the brand name and operation manual, responsible for marketing. Franchisee owns the business, using the franchisor’s brand, to run the business. Franchisee is responsible for the finance, cash flow, staffing and the inventories.

Franchisor and Franchisee may be jointly responsible to look for location. The Franchisor may take up the lease and sublet to franchisee.

From the above relationship, do you consider the franchising as a partner or consortium?

When you consider the franchising as partner, your expectation would be different. As a partner, you would want the franchisor to support you for all changes or adjustment to the local market conditions.

As partnering relationship, you may have an understanding and an open communication between the franchisor and you. Beside yourself, you may appoint your assistant to follow-up. Likewise you may request a list of persons for contact and their area of expertise.

From the communication, you would able to know how committed we are.

What would the scenario be if you do not consider franchising as a partnership? Franchisor may take the opportunity to request for high initial fee. Subsequently they may not be able to offer the support you requested. Franchisor also afraid of you not adhering to their operations guides and dilutes their brand.

Do you think that you are having a win-win situation?

Getting the right start is important to the success of franchising.

Managing the expectation of franchisor is important. More important would be your expectation in franchising.

© Copyright 2008 KnowledgeMediaNetworks, LLC.

Franchising is the legal for business commitment of parties, franchisor and franchisee.

The first contract may reflect the intent to create a legal contract between you and the franchisor, be it at the exhibition or an event you attended. You may sign a Letter of Intent (LOI) or Memorandum of Understanding (MOU), to signify your engagement with them.

Before you start sourcing for the right franchising partnership, you may want to consult some legal personnel on franchising. Franchising is a business model that governs two or more parties to form a consortium or alliances to run a profitable business.
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Franchise is one of the business models. I took an interest and did some research on Franchising. Our local Franchising and Licensing Association would organize Franchising event bi-yearly. Before visiting this Franchising event, I prepared my check list:

1. the local knowledge of the Franchisor
2. numbers of franchisees are operating and where
3. what are their unique selling points
4. franchisor’s organisation and staffing profile
5. the franchisor’s business plan

Armed with the checklist, I started to visit the Food and Beverage counters. I approached the Franchising firm for “Cakes and Pastries”. The “Cakes and Pastries” Franchising firm offered to grant the use of their” brand”, their operation manual, be the tenant of the outlet and the marketing. I attended their video show and talk on their franchising concept and framework. Their ingredients for making cakes and pastries are organic and high fiber. This is their unique selling point.

The firm requested a non-refundable deposit and it can be used as part payment of initial fee upon signing the Franchising agreement. I noted the terms and conditions that would form part of the contractual agreement.

Moved on to the next counter, I was attracted by their tag line “We serve the world with quality food” and they are Franchising their “drought culture”. They want the Franchisee to run their concept as food kiosk.

Interesting, the Franchising company want to be involved in recruiting the staff and training them. This Franchising company shared with me why they want to get involved. The people are the one that make or break the business. They are the interacting with clients. To have a quality and fantastic food is not enough, they want to build the service culture for warm and caring atmosphere. The Franchising firm wants to ensure the good buying experience of their target segment of the F&B.

Walking toward the counter that offer “Ramen and dumplings” kiosk concept, I noted that the visitors would just collect their marketing materials, whereas I took notes of my findings and my personal assessment based on my checklist.

Using a check list, it helps me to stay focus and objectively evaluate each counter. I also did the review about each of these Franchising firm. I put a rating and rank them. Those that met my criteria, I would visit them again during the last day of the event.

From this experience, I have more confident in getting a profitable Franchise.

© Copyright 2008 KnowledgeMediaNetworks, LLC.

Franchising offers higher chance of success. We always envy others able to do it successfully. Seeing others being successful and get down you to do it is a totally different matter.

You may wonder why. Franchising needs to comply to certain franchising legislations for some countries. You need to check up the rules and regulations. Franchisor would usually need you to sign up the contract that specifies your roles. Next is the compliance to the franchising operations manual. Franchisor would conduct periodic audit.

Unless you are lucky to get a Franchisor representative who is prepared to list down the core elements that must comply and another list of elements that you can make adjustment to the local taste or preference.

The approaches adopted by franchisor are important. We need to have a cordial relationship with the franchisor. At the same time they are aware of the local culture and local franchising legislation to carry out the business.

The next area of concern would be you. Before you take up the franchising business, you are prepared to put in how many hours of work. How many roles are you prepared to take? How are you going to expand your business – one outlet or more?

Starting a business is an easy decision, sustaining and growing the business would require business acumen. How are you going to upgrade and update your knowledge, your market condition and economics situation?

You are to take care of marketing, finance and operation, not mentioning about handling staff issue. Which function is your strength and which areas need to engage people. How do you set target for yourself and your staff?

Doing the franchising business takes you beyond just seeing how others succeed. That is franchising.

© Copyright 2008 KnowledgeMediaNetworks, LLC.

Franchising has a concern of the management team and the operations employees. This precisely Franchising and Human Resources are interlink.

Can Franchise fail? You would note that Franchising is a business model based on the head quarter culture and language. You would also acknowledge Franchisor had built their brandname and the consumers are aware of the brandname. By bringing in this Franchise, you are being assured of its success rate up to 50%.

What would make the Franchising fail then? You may not be surprise when you recognize that your team makes the difference. The execution of your franchising business would depend on the people on the ground.

Franchising would specify the training program for the operations. You may even request the franchisor to give you’re a blueprint of the organisation chart, job description and the competency level.

You may assert that for the initial start you cannot afford to employ a fulltime staff for Human Resources. You got to know about the local employment legislation and also manpower costing.

On the other hand, you may engage a part-time Human Resource executive working 2 days per week. From the Franchisor’s input of the job descriptions of various positions, which roles are you going to take up? What function is your expertise – Marketing or Finance or Human Resources.
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Franchising in the marketplace is getting attention. Franchising recognizes the need for marketing. Franchisor and Franchisees would agree that they would have a monthly budget for marketing. In Franchising, corporate image and branding is of prime concern. To be successful when you launch a new outlet of your Franchising, you need to consider soft-launch and get a feel of consumers’ preference. Franchisor needs to be flexible for local taste and choice.

From the soft launch and market response, a more detailed marketing campaign shall be in place. The plan for official opening includes the promotion items that attract consumers or the targeted clients. Likewise Franchising is based on the strong relationship and common goals. Therefore, shall share plan and action to achieve the best result.

Franchising and marketing works hand in glove. Franchising provides the expertise in operations manuals and service standards. Marketing provides the strategy to pull customers and have favorable buying experience.

Franchising would offer the layout of the outlet. Obviously you would have selected the appropriate location and negotiated a reasonable lease for your opening of this outlet. Franchisor would offer expertise in getting the right equipments; counter setting and Point of Sales (POS) system.
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Franchisor grants you the permission to use their brand, their operation manual. In return, you promise to share the profit with the Franchisor. Generally, franchisor would get a percentage of sales, be it gross sales or net sales. For some Franchisors, you may need to take their products.

You need to know what to do when you want to take off.

1.You need to establish the work plan as part of your franchising operations strategy.

2.You shall get commitment from your franchisor on the time series of action.

3.You would monitor the type of customers you are serving against the customers you intend to attract. This is part of the Franchising strategic plan.

4.You may monitor your inventory especially you are taking the products from franchisor. What can sell and what are not moving.

5.You may track the operation hours that have the most customers and how your staff handles the situation. This would help you to establish the opening hours.
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