The franchise business is one of the most popular models for business people, especially for beginners. Many reasons in it that make they choose a franchise business. One of them is the potential profit opportunity by a brand that is already stable and well known, which will be greater than starting from scratch. An example of a company that implements a franchise system is Mcdonald’s.
Almost everyone knows Mcdonald’s. The majority of the outlets are always full of buyers. Mcdonald’s is a fast food company with a franchise business system in various countries. So what exactly is a franchise business model like? And how does the system work? The review below will explore the ins and outs of the franchise business.
Getting to Know the Franchise Business
The meaning of franchising in business is a cooperative relationship between the owner (franchisor and the buyer (franchise) in a contract agreement. In detail, the owner of a brand of a company will give a license to the party who entered into the contract agreement. The contract is based on the use of intellectual property rights (IPR) and the use of features typical of the business owned. Later, the profit-sharing procedure is by the franchisor’s agreement.
The contract agreement in this franchise business is marked by the payment of an initial fee (franchise fee). This is the basic cost that the franchisee must pay to the franchisor before the franchise outlet opens. The basic cost is the license of the right to use the brand according to the operational guidelines within the period of entering into the franchise agreement. In Indonesia, many franchise businesses have been successful and successful.
Such as Promise Jiwa, Baba Rafi Turkish Kebab, Menantea, Indomaret, J.co Donuts, and many other well-known brands. Well, if you are interested in owning an outlet from a popular brand, then the next step is to franchise the brand.
Multiple Types of Franchise
There are several types of franchise businesses that can be a reference when choosing the business. The types of franchises include the following.
1. Trade Name Franchising
Including the type of franchise that gives the franchisee the right to do their production, but remains under the supervision of the franchisor.
2. Product Distribution Franchising
A type of franchise in which a franchisee obtains the right to carry out the process of distributing products in certain areas. Because each region may have a different distribution company even though the product is the same.
3. Pure Franchising/Business Format
Is a type of franchise where the franchise gets full rights in many ways. Such as trademarks, sales, equipment, operating methods, management, marketing strategies, and so on.
Advantages and Benefits of Running a Franchise Business
Many people choose to run a business by franchising a well-known brand. Why is that? No other, the reason is that there are many profits offers that business actors can get.
So what are the advantages and disadvantages that a franchise can get when choosing a franchise business? For more details, let’s look at the following review.
- The business brand is already known to many people, so that in marketing it will be easier, aka no need to start from scratch again;
- The process of opening a business is faster and more structured because it gets help and assistance from the franchisor company;
- The business management of various matters has been well developed and has received direction from the franchisor, including financial management;
- Get regular mentors for business development;
- The risk of failure is minimal, as long as you choose the right brand or franchisor. Namely, those who already have experience and good credibility;
- Gaining knowledge in running a better and more focused business. That’s why the franchise business is suitable for beginners;
- Get a lot of business networks that can expand your reach and knowledge.
- The profits that the franchise can get will certainly grow over time. However, you still need to consider many things when choosing a franchise business, especially in terms of budget.
Well, funds are often one of the risk factors in running a franchise. Why? One of the reasons is the payment of a franchise contract license. Especially if it’s a big brand, you need a lot of money.
Recommended Franchise Business Idea
To make it clearer, we will provide recommendations regarding several franchise companies that you can use as references to become a franchise.
Beverage Franchise Business Idea from Popular Brand
Today the contemporary beverage business is quite popular. Such as iced coffee, boba drinks, tea, and so on. Many young people like the drink. This is a potential that is quite tempting, especially since many popular brands have opened a franchise system for those who want to try out the business world.
Popular Food Franchise Business Ideas
The food business is endless. For those of you who want to start a food business, there is nothing wrong with starting a franchise. This will help knowledge related to how to manage raw materials, production systems, employee management, and so on. Some successful food franchises that attract the following customers can be a business reference.