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You will find top quality information and advice here at Franchisewebsite.co.uk. Below are just some of the questions taken from our franchise information section.
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What is franchising?
Franchising is a method of distributing products or services.
At least two levels of people are involved in the franchise system, (1) the franchisor, who lends the trademark or trade name and the business system to (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchiser’s name and system.
Technically, the contract binding the two parties is the franchise, but that term is often used to mean the actual business that the franchisee buys from the franchisor.
What is the best advantage that franchising has over independent small business?
Franchisees are never alone, which is one of the best benefits that one could hope for in this tough business world. On one hand they have the franchisor to support them and on the other they have franchisees that are having parallel business experiences.
Unlike brand new business concepts which can take years to launch, a franchise allows you to get into business quickly and easily. Franchises feature tested business systems, perfected products or services and operational procedures that are already in place. And as a franchisee, you can take advantage of training programs and support services that are designed to get you up to speed quickly
Furthermore, as a franchise matures, the brand name and trademark becomes more valuable. So as franchisees consolidate in the marketplace they are actually adding value to the group as a whole.
Similarly, as a franchise grows in numbers, the multiplication of sites creates a stronger market presence, which benefits all franchisees.
Franchising Tips.
Work out what you can afford?
For an established successful franchise a rough guide is to that the banks will usually lend up to 70% of the total cash requirements. If you have, for example, savings of £30,000, you could expect to be able to finance a franchise with start-up costs and working capital totaling £100,000. Security will probably be required for at least part of the money. For a new or relatively untested franchise with an increase in risk for all parties, the money available will probably be nearer to the traditional pound for a pound basis i.e., a need for £20,000 contribution into a start up cost of £40,000. The more tried and tested the franchise, the better the terms.
Projections and contracts
Ensure your financial projections cover all the foreseeable expenditure in setting up the business. Remember businesses need time to establish themselves and may not grow as quickly as you first envisage.
Plan carefully;
Not being able to estimate the amount of money you need is one of the main pitfalls of starting a new business.
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