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  • Category: Finance and Investments

    What is a franchise in starting a buisness?


    Have a query about franchise business? Interested in knowing all about this? Scroll through this Ask Exeprt page understanding all about the frnachise business here.

    Please explain me all about franchise business.
    What all we have take care when we take franchise from a business? Are there different types of franchise? Which are the best websites in India who make people connect with franchise business? How many franchise can one register in his name?
  • Answers

    4 Answers found.
  • In any business there needs to be customer connect with ease and the franchisee plays important role in spreading the business and thus a network is created. Through franchisee the main chain of business is spread over across the country and thus under one brand name different branches try to function with one goal and one policy. In fact their product and services would be similar and the color of the building also same. Many schools are functioning in the name of franchisee and they are successful. For example Delhi Public school, Jawed Habib Salon etc.

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  • Franchising system of business has two parties: Franchisor is the original Trade Mark holder and Franchisee is the receiver of right.
    Now generally three types of franchising system exist:

    1) Product franchising: Under this system, the franchisee gets the right to distribute the trademarked goods from the franchisors or manufacturers by paying fees for this to earn a profit. Generally, highly popular goods are traded. Singer corporation traded their sewing machine and in the automobile industry, this system exists.

    2) Manufacturing franchising: Under this system, the franchisee gets the license from the franchisor to produce and market the goods in a particular area. In soft drinks companies, you can see such system.
    3) Business Format franchising: Under this system, the franchisor sells the complete right, ie. business name, license, product or services, physical plant or operational strategy to be taken etc. In the hotel, restaurant and education sectors, you can see this system. It is also known as pure franchising.

    Yes, there is the Association of Indian franchising, website address is franchiseindia.org, which functions as the monitoring authority of such activities.

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  • Franchise is a business model where a person can start a well settled and established business immediately. In a franchise business an existing business first sets ups it's business by providing quality services and standard. Once it achieves a goodwill and name in general public it starts to open its branches in other towns cities and towns and even different countries in the form of franchise.

    Franchise can be of service business, preschools and even food chains. Service business example being Salon, car repairs service, laundry service, etc. Preschool examples like Kidzee, Maple Bear, etc and food chains like Haldiram, Domino's Pizza, Haldiram, etc.

    For obtaining a franchise lump sum payment is to be made to the franchise owner as one time payment and regular payment as royalty on sales. Regular support and technical support is provided to the franchisee for such payments.

    In India a website franchiseindia.com can be referred. There are many other websites that can also be referred for finding current franchise options. You can also contact the franchise/business owner directly to obtain franchise in your city or town.

    There is no limit to the number of franchise you can own if the same belong to different businesses as well as there is geographic vicinity clause is followed. Although owing a franchise is an expensive affair so jump into such business if you have more than enough resources and backup.

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  • Every company or business house wants to expand its business and their dream is to have a company outlet in every nook and corner of the country. Of course it is a mega task to do that but what companies generally do is they call for franchise in main cities and towns so that it is not only an advertisement for their products but also gives them an access to the franchise outlet for promoting the sales of their item and the franchise also gets his usual commission as well as time to time some benefits or schemes as announced by the company to woo its customers. Any shopping establishment having the requisite infrastructure and capacity to store the company items can become a franchise by entering into a contract with the company. Sometimes the company will appoint that as a wholesaler point also and it can supply the items to the retailers in that area. A franchise is a proud owner of the fact that the company is selling its item through it and it is natural that company also likes that franchise should act in accordance with the company policies for selling those particular items to the customers. Franchise has to keep in mind that it should not indulge in any practice that makes a bad name for the company. For many companies branding is an important issue and they will like to have their reputation maintained and would expect the actions from the franchise in the same manner.

    One has to apply for the franchise outlet and if the company finds that the establishment is appropriate for selling, storing, and distributions of their product in an efficient and timely manner then they would make that establishment as their franchise and work together for mutual benefits.

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