Franchising business

[Snoop222]

anyone here has got into franchising business? i think most people notice the advantages of it. but what about the disadvantages? any bad encounters or experience?







Q (http://www.geocities.com/displex_ph)

[cong]

im looking into it. franchising in the sense that, id like to be the franchisor, not the franchisee.

what prospective franchisees should think about:

first off, franchisors and franchisees dont usually get along.

advantages:

brand recognition. mc donalds tend to sell better than mang tikboys hamburgers.

national advertising. lets see mang tikboys hamburger buy airtime.

the amount of resources/training from the corporate office (franchisor). have questions? i wonder where mang tikboy would search for answers. most franchisors provide a franchise support center for any and all queries. in other words, you have tons of SUPPORT.

a chance to share, interact with your fellow franchisees.

disadvantages:

can you say ROYALTY? if business is bad, franchisees have a hard time mailing in that royalty check. royalties are often justified by franchisors by the amount of support you get from them. i mean, its okay, IF business is good, what if business is bad?

everything is "uniformed". franchisors are often strict about logos, signs, the product in general. in short, you have none or less if at all creative control.

CAPITAL. got to shell out to start. youre leasing, youre renting, their lending you the rights to use a recognizable name, and it dont come cheap, let me tell you.

*youd be surprised what goes on in a franchisors boardroom. do you know that the franchisors and franchisees fight about the littlest detail? e.g. the appropriate straw length. do we use paper or plastic? enviromentally friendly or cheap? stuff like that.


overall however, franchising, whichever side of the business youre on, can be profitable. prospective franchisees should look at the business model, the amount of support they get, and ROYALTY RATE.

prospective franchisors should look for QUALIFIED (loaded) people with the drive, with the proper attitude to run a business. bright enough to run a business, but not too proud to follow strict business standards. must have a business plan or a formula for success. must know how to draw up financial statements. or hire someone who knows how. most franchisors have business managment consultants that helps franchisees on these things.

questions? comments?

[n0b0dy]

just a comment cong...

a business that is part of a franchise is recomended for tough economic times, it has a better chance of surviving.

in fact, in the Philippines the best investment one can make is to buy a franchise, because it is not only stable, the profit margins are better.

Yet another study done in the Philippines by an MBA school did ( forgot which school) says that the best business venture right now is a barber shop and second on the list is a pawn shop. They found that these businesses were stable and had a really good profit margin....

why am i blabbing all bout this?

if you want to become a franchisor in the Philippines, your best bet would be that of a barber shop franchise....

[Leigh]

There are some related threads (but not quite) about this topic, you might want to check out:

How does one Franchise? (http://www.pinoyexchange.com/forums/showthread.php3?s=&threadid=10720&highlight=franchise)

Which foreign franchise would work here? (http://www.pinoyexchange.com/forums/showthread.php3?s=&threadid=10141&highlight=franchise)

Some Franchising suggestions:
What Franchise can you own with just 35K, 175K, 200K? (http://www.pinoyexchange.com/forums/showthread.php3?s=&threadid=10173&highlight=franchise)

anong magandang business pag puhunan mo ay Php 150,000.00 lang? (http://www.pinoyexchange.com/forums/showthread.php3?s=&threadid=36089&highlight=franchise)

Some threads have actually mentioned things about advantages and disadvantages of Franchising.

[KuHRant^21]

We already had an experience in franchising because a relative owns Padi's Point and a close friend owns Cravings.

But then you don't see that kind of success story all the time, in fact, very seldom.

In owning this form of tradiitonal business (brick and mortar), one has to consider so many factors..

1. the right geographical location for your business vis-a-vis your target market
2. the success of the franchisor
3. you depend on the cycle of that economy and that city or area
4. 50% succeed withing the first 3 - 5 years.
5. end up working many years to pay back failed business debts (you have to consider this possibility)
6. investing a large capital
7. pouring in so much time, esp. for the first 3 years where your business is at its most crucial stage

but then franchising is a better option than starting your own business because the risk of failure is relatively smaller if you've chosen the right business.

We all found it a lot easier to handle a network marketing business than in owning a franchise for the ff. reasons:

1. The business is global (you aren't limited to a specific geographical location)
2. Highest returns vis-a-vis the very low overhead
3. Ability to create leverage (increased means by which to attain something)
4. More time to yourself

Of course, it also entails you finding the right one, just like finding the right franchise.

[cong]

Originally posted by n0b0dy
just a comment cong...
a business that is part of a franchise is recomended for tough economic times, it has a better chance of surviving.


smart. once again, that all-important recognizable product, the name that stands out from the rest plays a big part. notice how lay-offs are coming left, right, and center. you dont hear none of that with franchising.

youre most welcome to add anything. :)

[KuyaDanny]

To the extent that franchisees implement "proven" business practices, and therefore tend to hit the ground running when their businesses open, I agree with the statement about chances of survival.

But being part of a franchise doesn't necessarily give somebody better access to capital - something quite important in turbulent times.

[cong]

Originally posted by KuyaDanny

But being part of a franchise doesn't necessarily give somebody better access to capital - something quite important in turbulent times.


agree. but who does?

[n0b0dy]

Originally posted by KuyaDanny

But being part of a franchise doesn't necessarily give somebody better access to capital - something quite important in turbulent times.

In the philippines you must have at least $8 Million to buy a reputable franchise.

So this means that only people with money can afford to get a franchise. In a poor economy like the Philippines there is substantial barriers to entry for most businesses. One of the biggest barrier is access to capital, whether institutionalized or otherwise...

As the saying goes, the rich gets richer and the poor gets poorer, and let me ammend this saying by adding, "and the middle class gets a little poorer every year....."

Here is an example of institutional barrier to entry; there was a time that one could not operate a Refilling plant for LPG, only shell, caltex, Petron, mobile and a few others were allowed to engage in that business. Even if you had billions of pesos you could not get a permit to operate this type of business, unless you bribed the right people... FYI, anyone can operate this type of business now...

whats my point.....Money is king, if you have it you can do pretty much what you want in regards to business.... If you have money, banks will literally knock on your door and say pls. borrow money from me... If you are also rich, you would probably say, "why should I pay interest on my own money!"

I am blabbing again...

Its a given that you must have good amount of money if you want to buy a franchise let alone if you want to become a franchisor....

[cong]

Originally posted by n0b0dy
Its a given that you must have good amount of money if you want to buy a franchise let alone if you want to become a franchisor....

galing.