Introduction
Let’s begin with a basic understanding of the term “Franchise Management.” Licensing agreements for certain trades, products, businesses, or private enterprises are an example of a “Franchise.” Franchise management entails being in charge of every facet of a business’s operations, from the ground up. Under the conditions of a license, franchisees may utilize the trademarks of the franchisor in order to develop their company.
Factors to become a successful franchise business owner
If you’re considering about joining a franchise, here are five things to keep in mind. Prior to starting your franchise search, it is important to consider your strengths and personality as a whole in addition to your specific areas of interest. Starting a golf equipment and clothing business on the basis of something like this isn’t the greatest idea. Ironically, you may lose the thrill and spontaneity that inspired your curiosity in the first place if you make such a move. You should examine your skills and shortcomings and then seek for a firm that may profit from those abilities. A well-known franchise or an unknown one doesn’t really matter; your own characteristics and attributes will have the most influence.
Secondly, don’t attempt to save your way to success by slashing your expenditure too much. When you’re first starting out in franchising, growing sales and making money are the most important goals. Nothing else matters if you can’t get these things to function. When your company is just getting started, you may have to spend money on things like longer hours or hiring more personnel. Technicalities like installing energy-efficient light bulbs or selecting a good inventory management system are pointless and time consuming. Having a successful business and happy customers will give you plenty of time to work out the nitty-gritty details.
It’s also critical to stick to your game plan. Owning a franchise gives you the freedom to operate according to a pre-established set of procedures and practices. The need to adhere to these criteria may seem apparent, but it’s still a good idea to make it clear. Keep in mind that the franchise world isn’t always the best place for individuals who don’t follow the rules, even if you’re not scared to do so. Make sure you are familiar with your franchise’s system. You should be mindful of taking shortcuts or developing your own methods for certain operations since the franchise has surely witnessed what might go wrong due of unanticipated consequences and unplanned happenings. Don’t be afraid to ask your franchise contact about a practice that seems out of place or inefficient – they may have an answer for you that you haven’t considered, or they could push you to try a new idea to see if it really works.
It is critical to continue networking after completing the last phase. With networking, you can’t go wrong, whether it’s with other franchise owners, members of your local chamber of commerce, or members of the community at volunteer events and festivals. There’s never a bad time to start a new project. Keep your ears open to what your consumers want and don’t want, and learn from the mistakes and successes of other business owners who are willing to share their own experiences with you.
Another crucial factor is conveying a feeling of belonging to the audience. Make your company more visible and well-liked in the community to increase your visibility and goodwill. Sponsor a local festival or a junior hockey team to show your support for the community. Make a generous contribution of your time or money. You may also donate items. It is possible that your firm may provide tours and educational sessions. Make it as easy as possible for your staff to contribute to these efforts by giving them with as much information as feasible. In addition to having your company’s name splattered all over the Internet, you’ll be able to feel good about what you’re doing.
Core elements of franchise business.
Business practices that are effective are the first step towards reaching success (Kuang J, 2001). The presence of a business system does not imply the existence of a franchise. The threat of death hangs over this sector like a dark cloud. The franchise business model, in the end, is all about the system, which includes the systems that are included inside the system itself. Whenever you’re thinking about buying a franchise, be sure to thoroughly examine the company’s practices before making your final selection. That is what you will get in exchange for your money.
The second consideration is the company’s reputation for quality and reliability. A well-known franchise may be hard to come by for most people, but it’s not impossible. As a result, they may be more expensive than franchisees without well-known names since they don’t have any sites in your area (in certain situations). Branded franchises are often sought for and well-known. If it has been around for a long time, finding a place for it may be tough.
The third component is an openness to new experiences. A franchise opportunity’s corporate office must always look for new ways to improve in today’s fast-paced environment. Modern clients value consistency, but they also relish the opportunity to try new things. McDonald’s serves as an excellent case study. At any McDonald’s, you may order a Big Mac. Chocolate shakes and excellent hot apple pies are also available here. They’ve become a part of the normal operating procedure. Customer service representatives are on hand to help you order the McCafé Iced Mocha from a high-end coffee machine. If you want to flourish as a franchisor and as a brand, you need to constantly innovate.
The last component is powerful franchisee training. Be confident in your abilities to run the franchise as a business owner. Training is the only way to build self-confidence. Your franchisor’s training is vital. For me, it must be awe-inspiring. Become well-versed in every facet of the day-to-day operations of your business. To avoid being startled, it’s best to plan beforehand. Any potential “surprise” difficulties should have been addressed by the franchisor in advance. Be aware that your company plan has been tried and tested. As previously mentioned, a franchisor has a responsibility of performance to its franchisees.
The vision is enhanced by well-to-do franchisees. In a perfect franchise, the owners will be well-off. There are some owners who were already wealthy before they became owners, but you need to go farther to discover the highest-earning staff. The top franchisors focus on their franchisees’ profitability. An expanding franchisor will have many very successful franchisees. Good news travels fast. Owners of different franchises talk to one another. They know who’s making money in the company.
Business registration requirements of foreign and local franchisors in Malaysia.
In Malaysia, legal categories of business include sole proprietorships, partnerships (including limited liability partnerships), corporations (or representative, regional, or branch offices of foreign companies), and limited liability partnerships (LLPs). A private limited company is the most common sort of business structure for a normal franchisor, and it is also the most expensive. According to the Undang-undang report (1999), the Malaysian government has acknowledged the significance of franchising in promoting the growth of local firms and the development of the franchise sector across the nation from its beginnings. To facilitate in the growth and supervision of the franchise industry, the FA, which applies across Malaysia and covers the sale of any franchise in Malaysia, was put in place. Any foreign or Malaysian franchisor, as well as any master franchisee, must get approval from the Registrar of Franchises (or both) before they may offer to sell or buy franchises in Malaysia, according to the Franchise Act (FA). Under the Franchise (Amendment) Act 2012, the franchisee of a foreign franchisor is obliged to register the franchise prior to opening a franchise company in the United Kingdom. Upon signing the franchise agreement, a local franchisor’s franchisee or a master franchisor’s franchise must be registered within 14 days after signing the agreement.
It has been widely reported that a law requiring local master franchise owners to manage their own successful sites for at least three years before they may designate subfranchisees has been met with strong opposition. In spite of the fact that the FA and any other rules do not clearly mention this obligation, authorities have interpreted the disclosure document to mean that franchisors and master franchises must provide three years of audited financial accounts.
As long as a franchisor can choose its own suppliers and employees, the government has some say in who they hire and how they do it (when granting its approval during the approval application or registration process). Even so, an application may be required to broaden the geographic scope of the rights granted to a potential franchisee in circumstances where the original scope was deemed too small or restricted (usually by reference to a radius in kilometres). Additionally, the franchisee will be required to provide an inventory of its suppliers in order for the Registrar of Franchises to grant license. Because of this, if the franchisor’s financial statements for the franchise company do not indicate profitability or healthy development, the Registrar is likely to deny their application for approval or registration.
In Malaysia, the local master franchisee is the one that makes pre-sale disclosures to sub-franchisees when a foreign franchisor selects a local master franchisee. The local master franchisee must explain to the worldwide franchisor why the trademarks belong to them and not to them. Section 54 of the FA stipulates that overseas franchisors must apply for a franchise before transferring their franchise to the master franchisee in order to provide all essential information to the Registrar. Section 16 of the FA, as amended by the Franchise Amendment Act of 2012, requires franchisees to submit an updated disclosure statement within six months of the end of the financial year of the franchise business.
At least ten business days before a franchisee wants to sign a contract with a franchisor, the franchisor must distribute a copy of the franchise agreement to a potential franchisee. An in-depth look at the business model of a franchise is provided to potential franchise owners in the disclosure papers. There are consequences if a franchisor does not adhere to the FA. Every time there is a major modification to the disclosure documents, the Registrar of Franchises must be informed. Annual reports must be filed within six months after ending the financial year in order to avoid criminal consequences. Previously revised disclosure documents must be included in this report.
Factors influencing international expansion of a franchise business.
Brand familiarity has a role. With the ease with which people may now travel, more and more people are familiarizing themselves with items and ideas available in marketplaces different than their own. They can now travel. The sooner you get your name out there, the better off you will be. We’ve all seen the phenomena of people lining up to get into a new market when a firm opens. You may get a lot of benefits by joining an already well-known market. The time and effort you spend into exploring this new potential market will benefit not just you but also your franchisees.
In addition, the present state of the market should be taken into account. How much is the new market’s economic environment affecting your industry? Is it a positive or negative comparison to the current economy? The economic climate in your sector is a good place to start when determining the profitability of your company’s brand. Who else is in the game? What is the current situation of the most intense competition in the market? Who are the primary players, and what are their unique selling points and success rates? Because it implies a need, competition is a good thing. When assessing the competitive environment, keep an eye out for levels of competitiveness that are too high or approaching saturation, since this would leave little room for new players to enter.
The last decisive factor is geographic distance. Your target market’s population is more likely to be acquainted with your brand in surrounding countries because of the increased frequency of international travel and relocation. In order to take advantage of the existing strong brand recognition in one of these regions, you should start your international expansion there. Expansion into new markets far from home presents additional challenges in terms of time zones, logistics, and travel time for your franchise partners.
Finally, cultural knowledge is the fourth and last factor. Having a deeper understanding of cultural differences between your market and the new market can make it simpler for you to engage with franchisees. Avoiding cultural faux pas is made easier using this method. It’s the same language. A nation with a substantial population of people who speak your native language is a good place to start when expanding into a new country since it eliminates the need for manual translations, streamlines staff training programs, and ensures that little information is “lost in translation.”
“Franchise Relationship Model” and its use as a guide for developing a high potential franchise venture.
From the physical structure of the franchise to the mechanisms for monitoring and regulating them, it offers a framework for designing and analyzing the franchise model When developing a franchise’s ideal service delivery system, there are a number of considerations to keep in mind (SDS). For the franchise connection, this paper outlines possible issues and suggests fixes.
As a result, franchising is a powerful tool since it has the potential to benefit many individuals. It teaches a potential franchisor and a prospective franchisee how to start and run a franchising firm. FRM also helps to identify which obligations are best handled by a corporation and which are best handled by a single franchisee. For example, Pizza Hut ran into problems when corporate management changed the business strategy that had worked well for franchisees. After the changes disrupted their economic stability, franchisees were naturally concerned about their financial futures. Confusion is a certain way to cause problems while franchising. This befuddlement isn’t just due to the financial repercussions. It may also be seen in the responsibilities of one’s work. When the franchisor sought to centralize and remove onsite phone orders, it caused uncertainty among franchisees for whatever reason.
In order to better understand these side effects, the FRM is helpful. In order to improve the franchise, it is necessary to identify the underlying causes and then reevaluate the financial health and reliance on the resources of each of the partner companies’ resources. However, since any changes to the contract must be approved by both you and the franchisor, these enquiries may cause conflict between you and the latter.
The FRM asks questions. Prospective franchisors and franchisees might both benefit from thinking about the challenges mentioned in this article. The replies provide a perspective that may help determine the entrepreneur’s success.. In order to have a successful relationship, both sides must understand each other’s motivations. firm in order for a fruitful business partnership to develop. As a whole, the FRM is examined as a whole and its components are examined individually. A potential franchisor must first deal with these challenges in order to build a franchise, therefore we’re going to look at each of these areas from that viewpoint. Prospective franchisees may also benefit from this conversation since it shows how a franchise and its subsequent FRM are created, allowing franchisees to compare various franchise systems.
References
Sang havi, Nitin. (1998). “Franchising as a Tool for Small Medium Sized Enterprises (SME) Development in Transitional Economies – The Case of Central European Countries”. Management News, Vol. 21, No. 11.
Fui‐Hoon Nah, F., Lee‐Shang Lau, J. and Kuang, J. (2001), “Critical factors for successful implementation of enterprise systems”, Business Process Management Journal, Vol. 7 No. 3, pp. 285-296.
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