Category : Business Service
India offers numerous potential for franchisors who tailors their brand to fit into the country’s dynamic consumer market and increase the growth of business productivity. In India, a huge market has created the space for competitive franchises for thriving the increasing incomes that have enlarged the demand for foreign brands. Because of the absence of comprehensive franchise centric legislation, to succeed in the Indian market, the franchisor will require a robust understanding of a country’s regulatory structure.
Franchising is running of the business by using some or all the aspects of another successful business that is done in partnership. In the past decades, the companies would provide the right to sell a product in a particular market which is called as distribution deals or distributorship. But, more recently, the concept of franchising has evolved the business that allows the grant to another business, the license to operate under the same name and use the expertise of parent company to establish their successful business.
Relationship between Franchisor and Franchise
A franchisor is a person that deals to sell the franchise of his or her brand to the franchisees. This relationship between the franchisor and the franchise is extremely powerful and important as well as this is the base of the franchise business. The franchisor, for an agreed amount of charges, lets the franchisee use his or her brand services, trademarks, techniques, name, methods, and many more other things which will let them expand the name of the brand to the larger group of people. Owing to the franchise business of the reputed brand and running it in order to generate more revenues as well as the name is the major and the biggest responsibility and this definitely calls for trust in the franchisor-franchisee relationship.
To capitalize the consumer's leisure time, whether they are retail stores, cafes, restaurants or anything else, successful franchises in India generally reflect the larger global trends and the most successful franchise all over the world caters to middle-class tastes and attempt. We all know that majorly people use to choose and take the franchise of business that is actually mostly in the market and are high in demand. The most successful franchise business sector in India are of food and beverages, hotels, retail, beauty and fitness, healthcare, medical services, education, etc. People use to take the franchise of these sectors majority as they are the most popular business in India that we have since a long time to cater to all the needs of the users.
The franchise agreement is the written legal document between the franchisor and a franchise. This agreement is the fundamental concept upon which the franchisor and the franchise relationship are based upon with all written facts and turns. This agreement is signed by both the parties i.e. the franchisor and the franchise. Some of the major aspects that are covered in the franchise agreement are as follows:
• Details about the franchisor as well as the franchise
• Appointment of the franchise and the grant of a license
• Location of the franchise
• Development of the franchise location and its maintenance as well
• Operation standards/quality standards
• Franchisee obligations/ franchisor obligations
• Terms and tenure of the franchise agreement
• Renewal and termination of the franchise agreement
• Consideration for granting the franchise
How much Cost is associated with Franchisee?
In terms of capital investment, your franchise fee will be determined by the profitability of the organizations. There are many companies who have scaled up when it comes to the fees for the franchise. It may vary ranging anywhere from $2000 to $100,000 and completely depends upon the size of the system. In addition to all this, front end franchise fee- the one time charges that are charged by the franchisor assess you to the privilege of using the business concept.
Some of the major areas where the cost is associated as:
In some cases, you may also have to buy land or building, or you may have to take the building for rent. The franchisor will offer you with the allowance for leasehold improvements which runs in the neighborhood of $10,000 to $35,000 for your average franchise.
Different types of business will require different pieces of equipment. Therefore, there are generally long term payments which are available for most of the equipment purchase. There are most of the banks that will provide loans for equipment because that also serves as collateral.
Outside signage can be quite expensive as compared to the inside one for the small business owner. There are many franchisors that have developed the sign package which franchise is obligated to purchase.
- Opening inventory
This usually consists of at least two week supply unless you are in the business which requires the much more complicated and enthusiastic inventory. Most of the franchisors will tell you what their opening inventory needs are.
- Working capital
If you are taking a building on rent, then you might have to deposit some for the first and the last month payment as well as a security fee. You will have to deposit the fee for electric, gas, telephone companies, etc.
- Advertising fees
This one is usually the fees for advertising the regional and national basis. There are many larger franchisors that need their franchisee to pay a certain amount into the national fund who use to advance the concept.
The industries are evolving at a much faster rate than it can be expected in today’s economic market. As more and more brands are stepping in and opening up new avenues, the opportunity to be the part of franchising is also increasing. The growth has become the essential amending of the franchising and the future is seen to be a promising one.