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THE ECONOMIC TIMES, NEW DELHI / GURGAON, WEDNESDAY, SEPTEMBER 20, 2017 A CONSUMER CONNECT INITIATIVE

ALL ABOUT
depending on the terms of
their agreement.
Power of Youth: For young
investors, franchise model
is an ideal start to their
Let's Begin: Setting up
one's business deters
many people as it involves
a slew of risks. While
franchising is a readymade
lot of risks.
Home Work: Do a research
about the industry in which
you are planning to enter
into. As with any business
According to a study, the Indian India is also the evolving economy in
franchise industry is currently the world with a growth of 75 percent
estimated at $24 billion and expected in consumer spending over the last
to be a $35 billion industry by 2020. four years.

FRANCHISE
It's worth understanding the fundamentals
of franchise industry to reap its benefits
Resp.Edit@timesgroup.com
business career. A
franchise is a win-win
solution for the franchisor,
as well as for the
franchisee. Whereas the
profit sharing is concerned,
the franchisee gets the
benefit of a proven brand
name and support and the
franchisee saves on
operation and setup costs
and in the process, a
business concept wherein
franchisee takes the
brand's rights from the
franchisor and operate
brand's franchise within
the market without any fail
and is able to make quick
profits. However, every
business comes with its
fair share of challenges.
There are various things
that you need to take into
decision, care should be
taken to ensure that
purchasing a franchise is
right for you. It doesn’t suit
everyone, so do your
homework to minimise the
risk of making a bad
decision. You may have to
make an upfront payment
to the franchisor, with no
guarantee of success and
no refund. How do you

F
ranchise system has franchisee also learns account. But a franchise assess the likely prospects
existence in India since the know-how of business model comes with of a franchise? If you receive
mid 1990's. Franchising running a a proven track record of information from the
has been one of the most business. success, which minimizes a franchisor about past
successful business models successes, how do you
in the world and it is growing know it’s true? It can be
rapidly in India too. Many difficult.
brands from each category Pick the best: Select some
have expanded their business brands of your
presence across India choice and check out
through Franchise model. their requisites. Visit
A franchise is a way of company's website
structuring a business. and also pay a visit
Generally, it involves the to its office to get
owner of a business (known the real picture.
as the franchisor) licensing to Talk to existing
a third party (known as the franchisees or
franchisee) the right to investors.
operate a business or
distribute goods and/or
services using the franchisor's
business name and systems
(which varies depending on
the franchisor) for an agreed
period of time, in return for a
fee. The franchise fee may be
an upfront payment by the
franchisee to the franchisor,
an ongoing fee (e.g. an Tips for franchisee
agreed percentage of
revenue or profit) or a Develop a business plan before
combination of the two. you sign the deal
Franchising is an alternative
to the franchisor building a Have an exit strategy policy
chain of stores.
Consult with professionals
WHY WOULD YOU BUY
A FRANCHISE? Investigate a franchise concept
There are many reasons why
someone would buy a Speak with current and former
franchise. For example: franchisees
● There are incentives to the
franchisee in owning and Exercise your right
operating its own business.
Pursue your legitimate
Monetary rewards are directly
related to the efforts of the commercial needs
franchisee.
Consider multiple franchise
● In some respects, it is
easier for the franchisee than
opportunities
starting up their own
business. A franchise should
have a brand that is well
established.
● In Australia, franchises are
regulated by the Franchising
Code of Conduct, which is
administered by the ACCC.
This provides legal
protections to franchisees, in
particular it requires the
franchisor to make
disclosures to prospective
franchisees (e.g. financial
information) and allows a
franchisee to change its mind
and walk away within seven
days of signing the initial
franchise agreement.
● The franchisor generally
provides assistance in
identifying suitable business
locations, which should
minimise the risk of the
franchise not operating
successfully, and setting up
so that it is ready to open for
business.
● The term can be flexible, it
could be as short as one year
or have no fixed term and last
forever.
● The franchisor generally
provides ongoing support,
training and knowledge
(including of their past
mistakes). This may be
specific to their business
model or general business
training in areas like
marketing, merchandising
and accounting.
● Buying one is generally
cheaper than starting your
own business.
● If the franchise sells goods,
the purchase price of the
franchisee is generally
cheaper than if it were a
stand-alone business as the
franchisor should have access
to bulk discounts.
● The franchisee indirectly
benefits from advertising by
other franchisees.
● Franchisees may be
protected from competition
(certainly within the group),