Best Practices: About Franchising

What is Franchising?

According to the International Franchise Association, franchising is “a method for growing a business and distributing goods and services through a licensing relationship.” Simply explained, franchising is the practice of one person or company (the franchisee) paying another (the franchisor) a set of fees and royalties in exchange for the right to use their trademarks, goods, services, even business model and operating systems for their own commercial endeavors.

Product Distribution vs Business Format Franchising

Product distribution franchising and business format franchising are the two basic types of franchising. In a product distribution franchise, the franchisees and franchisors have a relationship that is quite similar to a typical dealer-supplier one. Franchisees may use the franchisors’ trademarks and market their goods, but only if they pay fees and buy a minimum quantity of such goods. On the other hand, in business format franchising, there is an emphasis on sharing business techniques, operating systems, and support, making the connection between the two parties considerably more complicated. Franchisees may also have access to the company’s operational systems and receive extensive help on matters such as site selection, training, quality control, and marketing, depending on the terms of the agreement. They also receive a license to sell items or services bearing the company’s name.

Best Practices in Franchising: How to Start Franchising

A. Choose a franchise

When choosing a franchise business, it’s crucial to consider certain variables and conduct thorough research before choosing whether you want to open a modest food cart business or a restaurant chain.

• Budget. Decide how much you’re willing to invest so you can limit your selections. If money is tight, you might want to think about applying for a franchise business loan.
• Company Reputation and Legitimacy. Nobody wants to unintentionally fund an illegal or untrustworthy company, but that doesn’t imply it’s impossible to succeed with franchise brands that are less well-known. Check with relevant government agencies like the DTI and SEC to see if the individual or business has the right licenses and registrations.
• Market, Location and Competitive Landscape. A franchise business’s success is not necessarily determined only by its brand recognition. Make sure the franchise you pick will work in both the local market and your desired site location. For instance, placing a high-end restaurant franchise close to an elementary school with a large student population may not be the ideal decision.

B. Apply for your chosen franchise

You may finally move on with the application once you’ve narrowed down your franchise choices to just one! Although the application process and specifications vary from franchisor to franchisor, generally speaking, you may anticipate to accomplish the following:

Submission of Documents

• Submit a Letter of Intent (LOI)
• Completely fill out the Application Form
• Provide valid Government-Issued IDs
• Submit a Resume
• Propose a Target Site Location Details

Meeting, Site Inspection and Approval

The franchisor will get in touch with you to arrange a meeting and/or site inspection when you’ve sent in your paperwork. Expect to be interviewed and given an overview of the franchise during these meetings. You can use this opportunity to ask them any crucial questions you may have.

Contract Signing

Finally, you’ll be contacted again if you’re deemed qualified to be a franchisee. Review the contract thoroughly, and sign it if you’re okay with the terms and conditions.

C. Manage your Franchise Well

Always seek to find methods to better the company and the way you run it, even with the current rules. Improve your marketing abilities. Enhance the caliber and effectiveness of your service. Observe any market or sector trends. For ideas and recommendations, speak with the franchisor or other franchisees. Keep in mind that obtaining a franchise is just the beginning! Don’t mismanage your franchise firm and finish the ride too soon.

Pointers

1. Each franchisee is legally and independent business entity.
2. The franchisor controls the product and services that the franchisee is permitted to sell.
3. The franchisor controls operating assets, goods and services utilized by the franchisee through the procurement program.
4. Grant of exclusive and protected territory. 
5. Exclusive relationship meaning Franchisee is not allowed to similar business.
6. Franchisee secures own site location.

Ready to start your franchise journey? book a free business demo http://bit.ly/GotoMokoFranchise or call 09451156384 or email us hello.gotomoko@gmail.com

Reference: https://www.mordorintelligence.com/industry-reports/philippines-foodservice-market/