Calgary: Understanding Franchising for small business
Author: Roosevelt Wagner
Profran Consultants Discuss Franchising
Imagine that you're opening your own McDonald's. To do that, you have got to purchase a McDonald's franchise. Your total costs to open the restaurant , however , will be anywhere from $685,750 to $1,504,000, which goes to paying for the building, gear, etc . Forty percent of this cost has to be from your own ( non-borrowed ) funds.
The other costs go to providers, so this is the only upfront payment you pay to McDonald's. Then, you'll go through a severe nine-month coaching period where you will find out about the McDonald's way of doing things -- things like their standards for quality, service, price, formulas and directions for menu items, their technique of operation, and inventory control methodologies.
Once you've finished coaching and are ready to go, McDonalds will offer you a location they have already developed. The exterior of the building will be complete, but you'll have to take care of interior additions such as kitchen gear, seating and landscaping. You'll get steady support from a McDonald's Field Consultant, who can advise you on details and shall visit frequently. You will pay McDonald's a regular charge of four p.c of your sales, and either a flat base hire or a percentage lease of at least 8.5 % of your sales. How much cash you make relies on many things, including the location and its recognition, the potency of your operating costs, and your ability to control and control the business.
Think about franchising as paying someone for their business strategy, advertising strategy, operations strategy, and the employment of their name. That is's pretty much what franchising is -- you are creating a relationship with a moneymaking thriving business so you may use its systems and capitalize on its existing brand awareness to get a faster return on your own investment. You are using its proven system and name, and running it by its rules.
According to the article'What is Franchising' by Robert Gappa, on the Franchise UPDATE site, there are over 2,500 franchise systems in the US with over six hundred thousand units. This comes out to about 3.2 % of all enterprises, and 35 % of all retail and service money in the U. .
The biggest advantage of franchising appears to be the reduction of risk you will be taking for your investment. This is because franchises often get up and running faster, and are profit-making quicker. According to the growing businesses Administration ( SBA ), most small businesses fail due to weak management. It is in this area that the franchising option shines the most.
You also often get better deals on supplies because the franchise company can get goods and supplies in bulk for the whole chain, and then pass that savings on to you and the other franchise units.
Customers are working with a'known' instead of an'unknown.' Think about it : if you are driving through a city you've never visited before and have the choice of a'Billy Bob's Fried Chicken' or a'Kentucky Fried Chicken,' which one are you rather more likely to stop at? Until you know that Billy Bob's is the spot for fried chicken, you may not want to take the chance .
For the customer, the advantages of a franchise include the comfort of knowing what you're getting. You know what they have and you already know what you like about it. Before you answer those questions, Get more details about how the franchise basically works. Contact Ken Hollowell at Profran Consultants, Inc. The firm is a leading company in franchise development.
About the Author:
Ken Hollowell, President/CEO of Profran Consultants has over 30 years been consulting with companies wanting to become a franchisor and develop a franchise system. Ken Hollowell has developed over 800 franchise business throughout the world. He is one of the most sought after franchise consultants in the USA. In addition to the franchise development work, Ken prepares private placement offering for companies needing to raise funds for their projects or companies. Ken can be contacted at www.pro