Franchising is a marketing strategy for business expansion and entering international markets. Unquestionably, this method of selling and distributing products and services is one of the best investments for a business tends to increase its market share or geographical reach.
A franchise agreement is a legal contract between a franchisor and a franchisee. In accordance with this contractual agreement, a licensor grants a licensee the right to utilize a patent, trademark, formulation, and so on.
In other words, the franchisor allows the franchisee to sell products under the franchisor’s business name when controlling the franchisee’s adherence to guidelines.
In exchange for obtaining a franchise, the franchisee agrees to pay initial franchise fees and royalties.
Indeed, franchising is an important marketing concept, used by many organizations as a way to develop business activities. This method of marketing allows beneficiaries to access know-how, operating methods, raw materials, training, equipment, financial resources or exclusive rights to live up to the brand standard and satisfy customer satisfaction.
Franchising offers a host of merits, like for example, using a ready business formula, market-tested services, and pre-established brand name.
The History of Franchising
Franchising can be considered as one of the most significant business inventions. It is often thought that franchising is a modern-day invention, but its origins can be traced to the Middle Ages.
The Middle Ages
The Middle Ages is where the concept of franchising started to appear. Local governments granted affluent people and church officials a license to access taxes on specific territories. These wealthy franchisees paid fees to the authorities in exchange for protection from taxpayers.
The Colonial Period
The next period that the idea of franchising began, was the Colonial period. During this time, some rich people were given the rights to perform business-related activities on specific territories. Some European rulers also granted franchise-type licenses to those who made a promise to establish colonies. Once a colony was created, the person could gain the protection of the Crown in exchange for royalties.
In 1840, a brewer granted the rights to some local taverns to sell their beer with the brand name of Spaten in Germany. The taverners had to use the trade name, and pay for royalties.
The new version of a franchise model can be traced back to Mr. Singer. He implemented a franchising plan to distribute his sewing machines. He found people who were willing to sell his sewing machines, then these people were trained and licensed to sell his products in specific geographical locations.
His attempt was unsuccessful, and he could not earn much money. It was dealers who absorbed most of the profits because of great discounts they offered, as they were given exclusive rights in their areas.
In 1891, Martha Matilda Harper included in her hair care franchise many elements of modern commercial franchise system, such as training, branded products, advertising, and so forth. Harper could grow her franchise system to many salons and training schools.
William Metzger opened the first independent automobile dealership to sell electric cars, with the brand name of Waverly. After his success, the automobile franchise network was appearing everywhere.
The 1950s and 1960s
As America shifted from an agricultural to an industrial economy, producers licensed certain people to sell and distribute their products, such as automobiles, beverages, gasoline, and so on, over greater distances.
Franchising boomed with the expansion of branded goods and chains.
the 20th century
In today’s world, franchise opportunities are as abundant as they have ever been, and this growth will be continued.
There are many franchise businesses throughout the world. These businesses support many direct and indirect jobs, and yield a lot of profits.
What is a franchise? This word in the Persian language has been translated as the “exclusive right”.
Franchising is a form of marketing and a method of distributing products and services. Two persons get involved in this activity: a franchisor, establishing a business system, and a franchisee, paying royalties and other fees to perform business under the franchisor’s name.
Simply put, franchising is the use of someone’s business philosophy. It is the right or license granted to an individual to market a company’s goods or services in a particular area and in a certain period of time. In most cases, Franchisees are given permission to use the franchisor’s branding, and trademarks for operating the business under guidelines.
Generally speaking, the franchisee receives site selection, training, brand standards, quality control, marketing strategies, and so forth.
Franchising is a proven model with well-established systems to reduce business risks. But no business is risk-free, and investing in a franchise is not an exception.
If you want to open a restaurant and enter the food industry, you should bear in mind that there is a cut-throat competition among newcomers. So, if you are unsure whether your business will be successful or will be doomed to failure, it is a good idea for you to become a franchisee. As this can minimize your risk and maximize your profit.
Franchising has become so popular, and it’s easy to find why. Buying a franchise offers the golden opportunity to be your own boss while benefitting from the security of a business model.
It is an interesting fact that currently about 17% of the US gross domestic products is generated in the franchise businesses.
Franchise diversity should not be limited to only some well-known companies, such as McDonald’s. In America, franchising has been established in 65 different fields, from restaurants to pet shops.
You don’t necessarily need prior experience to run a franchise, as franchisors provide the training you need to operate your business on a daily basis.
It may cost less to buy a franchise than start your own business, as franchises often have an established reputation, proven work practices, access to advertising, and continuous support.
How to become a franchise owner?
The first step is to decide on the type of franchise you want to open and are interested in. One mistake you can make is investing in a franchise when you are not compatible with it.
Indeed, if you want to enter the world of entrepreneurship or start a new business by purchasing a franchise, then the first step is the hardest.
All businesses involve in some degree of risks. But with franchising, you can analyze what factors impact the risk levels to make sure whether you want to invest your precious time and money.
Frankly, the risk of business failure reduces enormously by franchising, as the business is based on a recognized brand name.
Another thing you need to find out is the initial investment and ongoing royalties you have to pay. You should also cover operational, equipment, and construction costs. Understanding these costs is essential, if you do not want to run out of money during the process.
Keep in mind that in most cases the franchisor provides you with the estimate of costs. To be more cautious always try to consider some percentage of errors.
you must know exactly how much time is needed to invest to become successful in your career, because like any other business,franchising also needs commitment.
you have to conduct some research to understand everything about the background of franchisor, the market trend, growth opportunities, conditions, limitations, and so forth.
You may be asked to provide detailed information about yourself, occupation, experience, credit profile, and financial status.
Franchisors look for franchisees with some business background, and try to identify whether you are a good match.
Successful franchises rely on franchisees following the system entirely. Consequently, they don’t want people who are unwilling to abide by rules and regulations.
When getting involved in franchising, you are not alone which is a great chance. Just make sure you know how much support you will get from the franchisor in different stages.
Your duty as a franchisee is to copy the formula to make a profit. Thus, you do not need to bring any innovations, as it is up to the franchisor to develop the system continuously to make the brand more prosperous.
You should be willing to learn from the franchisor and other franchisees, because you get the benefit of a complete training package.
Becoming a Hononoy Donuts franchise
The biggest service that a chain group can offer to its representative is to turn them into a professional manager after passing some time. This can be possible by the contribution of Hononoy Donuts.
Hononoy Donuts Coffee Shop Chains, with the successful franchising system, can be considered as one of the best investments in every country. We are ready to provide all required services to people, wanting to start a franchising business.
Investing in Hononoy Donuts can be a golden opportunity for you, and we guarantee your success completely.
Hononoy Donuts Company provides investors with the best tailored financial advice to achieve the right combination of safety, income, and growth by considering all circumstances.
If investment in Hononoy Donuts is not profitable for you, our experienced consultants let you know the root reasons behind this by providing logical justifications, as we do believe that honesty is the best policy.
In fact, Hononoy Donuts can stand out from the crowd by offering a team of dedicated professionals to guide you through all stages of development and operation.
We decided to build, implement, and develop a successful franchise system to satisfy customers’ needs and provide them with the finest products.
We, as a franchisor, grant franchisees the right to run a business, using our franchisor’s business system. Our franchises are also given permission to use our branding under specified guidelines.
Managers, entrepreneurs, and investors who are looking for safe investment can now talk to our consultants and join Hononoy Donuts.