For every prospective business design, the main idea is to reduce the risk factors or reduce the chances of failure. In this respect, Franchising provides the best-possible business mould where the main purpose is to make sure that the franchisor and franchisee both benefit. The franchisee is assured of minimization of risk whereas the franchisor is guaranteed a royalty fee in return. The franchisor has to look after the interests of the franchisee because of his own vested concerns. An unsuccessful franchisee would translate into no royalty being forwarded. Therefore, the franchisor makes sure to impart as much training/skills/support to the franchisee. In comparison, new start-up businesses have the risk of failure whereas the best franchise opportunities offered by reputed brands, companies make sure that the franchisee earns profits from its very inception.
Common Practices
The franchisee-franchisor relationship is an ongoing process, like a continued association with a common goal. The best franchise opportunities have the parent organisation or the franchisor making sure that the franchisee doesn’t commit the same mistakes that had been committed when the business was initiated and had just started function. It is the duty of the franchisor to make sure that the wisdom gained from years of practice is passed on to the franchisee. The franchisee in turn is responsible for making use of these tips and providing an honest feedback regarding the relevance of the training/support provided by the franchisor.
Best Franchise Opportunities
1. Becoming a Master Franchisee — a master franchisee has an assured method of getting an income when compared to a normal franchise operator. As a master franchise, there is the provision of generation on income through personally-owned stores with a reduced royalty/franchise fee. In addition, a master franchisee can generate income through —
• Franchise Fees from a number of subordinate franchisees.
• Ongoing Royalties — this is the master franchisees main source of income source.
• Fee for products that are a part of additional services.
• Whenever, real estate is involved in a franchisee’s location, the master franchisee is usually involved in development of the site and basic infrastructure and charges a certain fee for it.
2. Buying an Existing Franchisee — sometimes people prefer to buy franchisees that are already functioning and bringing in profits. This is the most assured form of becoming a franchisee but it is quite expensive to buy a profit-making franchisee.
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