by Rudolf A. Kotek
Some companies are selling an opportunity to investors under the misguided notion that because they don’t charge franchise fees they are not a franchise. These companies are business opportunists. Some even boast “No franchise fees or royalties, no territory or expansion restrictions”. Worse yet, they make unsubstantiated earnings claims.
These Companies also forget to mention what else they don’t have: No ongoing support or buying power for you, no credible image or identity of company products or services, no consumer awareness building power, no ongoing research and development for you, no protected territory for you, no substantial demographic or geographic considerations studies for you, no proven and documented marketing plan for you, and much more.
Generally, whether or not a business opportunity is a franchise, they can be summarized s follows:
If you sell a business opportunity to any person and you;
-Allow the buyer to use your company name or logo;
-Charge a fee to the buyer;
-Provide any significant assistance or maintain any significant control over any part of the business;
-Train the buyer;
-Include him in the system of the business;
Certainly then it is a Franchise.
Franchising, under a business microscope, has more meanings. There are two types of franchising: Product franchising, like Pepsi Cola or Toyota, and, business format franchising, like McDonald’s. Product franchising is very big business, but it is not an investment consideration for all but a very few. The true fame of franchise investments has come as a result of business format franchising, which, from this point forward I will be referring to as I speak of franchising.
Retail franchises require retail space, a store, a building or an office, service franchise generally do not. Customers come to retail locations to purchase franchise products or services. Virtually any product or service that is sold to the public can be purchased through a retail franchise store or mobile franchise service.
But once a company has properly formed a franchise system, then all the benefits of franchising fall into place, for the Company and the Franchisees of the system. Important is the development of the Franchise system by a competent Franchise Consultant.
Franchisors which fail usually did their Franchise system without professional development assistance from a Consultant sometimes to save money in the end it cost them dearly. The initial investment in a professional Franchise Developer is easily recovered with the sale of some Franchises.
Rudolf Kotik is the founder of RK Franchise Consultancy Inc, which developed more than 300 Filipino Companies into Franchise Systems. Email: rk@rkfranchise.com; Websites: www.rkfranchise.com, www.fifa.ph, www.franchise.ph, www.cebuexpo.com.
