by Rodulf A. Kotek
What is the best advantage that franchising has over independent businesses?
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, which are having parallel business experience. Furthermore, as a franchise matures, the brand name and trademark becomes more valuable. So, as Franchisees consolidate in the market place, 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.
Questions regarding a Franchisor’s obligations from that of a Franchise applicant
• What is the total investment we are talking about, beside the Franchise Fee, rental deposit and utility deposits, such as renovation, equipments, initial investment in merchandise, grand opening marketing, etc.?
• What products have to be purchased from Franchisor?
• What kind of training do you provide? If so, when, where and for how long?
• Do we have to pay for the training? In most cases training fee is included in the Franchise Fee, except lodging, transportation and allowances for Trainees.
• Are we entitled to continuous training throughout the term of the Franchise Agreement?
• Will you provide us an Operations Manual?
• Will the Franchisor provide advertisement or does it have any advertisement schemes, such as National Advertisement Fund, Local Store Marketing or Co-op advertisements?
• What continuing service do you provide after starting the operation?
• What are the terms for renewal, and is there any renewal fee to be paid?
• Payment of initial franchise fee? Usually to be paid upon signing of the Franchise agreement.
• When do we pay royalties? Most franchise systems have monthly royalty payments.
• What are the major growth sectors in “business format franchising”?
• As we become a more service oriented economy, as more women enter the workforce, and as a larger percentage of the population grows older, growth areas in franchising are responding to these changes. While it is important to consider industry growth before investing in a franchise, it is more important to analyze an individual franchise company’s track record, keeping in mind that quick growth does not always spell success. A franchise organization that grows too quickly might not have a service team in place to support all of the units properly. Overall, long range trends indicate a steady, solid growth in business format franchising. Some will fall by the wayside, as is natural with any business, but others may well be the “household name” franchise success stories of tomorrow.
Rudolf Kotik is the founder of RK Franchise Consultancy Inc, which developed more than 350 Filipino Companies into Franchise Systems, with address at G/F Minnesota Mansion, 267 Ermin Garcia Street, Cubao, Quezon City. Tel. 9122946, 9122973, Cebu Tel. (032) 273.3827, 238.3933 Email: rk@rkfranchise.com; Websites: www.rkfranchise.com, www.franchise.ph
