Wholesale food franchise. Trading franchises - what they are and how they work. What is royalty and lump sum in a franchise?

This is an opportunity to run your own business under the brand and with the support famous company. In short, this is the right to use the brand, the current business model and control by the brand owner (franchisor).

How much does a franchise cost?

From 10 thousand to 100 million rubles. Of course, there are franchises beyond these limits, but 99% fit within them. The price of a franchise depends on investments in equipment, premises, purchase of goods, personnel, marketing, as well as on the size of the lump-sum contribution.

How does a franchise work?

At the moment of signing the contract, the franchise buyer (franchisee) receives from the brand owner (franchisor) the right to work under the brand, as well as a knowledge base and standards. The franchisee pays a lump-sum (entry) fee. Then he undergoes training and launches his own enterprise. The support received throughout the work is paid for through royalties - ongoing payments (usually monthly). If the franchisee wants to open another outlet, he usually signs the contract again. The same applies if the contract period has expired.

What is a franchise in trade?

Franchises in trade (aka ) are a way of doing business in which you not only purchase goods from a well-known company, but also open a store under its brand. The peculiarity of such franchises is the absence of a lump sum fee and royalties: they are usually included in the price of the purchased goods.

What does a franchise give?

A franchise gives you the opportunity to minimize risks when starting a business. You will already have a well-known brand and experience management company and other partners. But don’t think that by purchasing a franchise, you have already ensured your success. It is achieved only by those franchisees who are actively involved in the operation of their enterprise.

What is franchising?

Franchising is a form of relationship between two entities (most often legal entities), in which there is a transfer of benefits (rights to a trademark and a knowledge base and work standards). Usually this concept is identified with a franchise, but there is a slight difference: if a franchise is WHAT is transferred, then franchising is HOW benefits are transferred.

Your own business or a franchise - which is better?

If you want your own business, but with minimal risks and are willing to limit your freedom for the sake of profit, then franchising is your choice. If you have absolutely new idea or you understand that you are not ready to work under someone else's control - it is better to open your own business.

Ready-made business and franchise - which is better?

Buy ready business only when you know what exactly you need, you know how to run this business, and you are sure that you will find such an enterprise. If you only have a rough idea of what you want to do, or you have no experience in this field, choose a franchise.

A franchise is a complex of benefits necessary for running a business, which includes the franchisor’s business model, brand and other components entrepreneurial activity. A franchise in trade may include original technology, a method of doing business, as well as a trademark and use of equipment. All this is transferred for a fee from the owner to the recipient, along with obligations and benefits.

Franchising in trade is the simplest and in a fast way promoting their business on the market, since the franchisee gets at his disposal a obviously profitable profitable business. In addition, the franchise seller is usually willing to provide full assistance and support to his franchisee (buying party), because the success of his enterprise lies in the interests of the franchisor (selling party).

Franchise cost: components

To buy a franchise in trade, you must pay a mandatory lump-sum (general) fee, which confirms the buyer’s rights to use a set of conditions. The franchisee also pays the trademark owner a certain percentage of turnover (royalty) monthly. In addition, the cost of the franchise includes capital that will cover the costs of starting a business (the price of renting/purchasing premises, equipment, paying employees, etc.). These funds are transferred to the franchisor if he transfers a “ready” outlet to the buyer. Use the franchise catalog on our portal to choose the most profitable franchise.

Advantages of a franchise in trade

A franchise provides enormous advantages to a company or entrepreneur who decides to open his own business, for example:

No need to promote the brand. Typically, brands transferred under a franchise agreement are recognizable and therefore do not require active promotion.
Rapid business development. By purchasing a ready-made business, an entrepreneur immediately reaches normal trade volumes. He doesn't need to win the trust of potential buyers.
Consulting, training and comprehensive support. Thanks to the active support of the franchisor, the franchisee avoids typical mistakes, which are admitted by almost all entrepreneurs starting their business from scratch.
Stable position in the market. A franchise presupposes clear territorial boundaries for doing business, which automatically excludes the emergence of competitors.

Thus, a franchise is a profitable way to establish a business and generate income.

Franchising is a common form of partnership in business. This trend has gained popularity in many segments, but most often it is found in trade. Each of us probably bought goods or used the services of franchised enterprises without knowing it.

Franchise - what is it in trade?

Franchise is a type market relations commercial concession. It means long-term business cooperation and partnerships between several companies.

The essence of franchising is the resale of the right to use a brand along with the developed business technology. As a rule, a large well-known company with a well-advertised name resells the right to use it, along with the technology for selling the product, to other market participants - companies independent of it.

The franchise agreement identifies the following participants:

A franchisor is an enterprise that, for a set fee, transfers its brand, know-how, business scheme or operating systems for use.
A franchisee is a company that acquires the opportunity to receive training and assistance in opening a new business project, wants to work under a well-known brand, and also pays an agreed amount for the use of a trademark, know-how and other business tools.

They form a reliable partnership scheme, which is built on the principles of mutual benefit. The parent company receives additional income from the sale of the right to use the brand, the opportunity to expand and increase awareness, and develop new regions. A franchisee, in turn, without experience in a certain field, can start working under a well-known name, use technologies that have already shown their effectiveness, and not risk losing their initial investment.

What is a franchise and how does it work?

The word franchise means permission to trade. For example, the 33 Bears enterprise produces waffles, which are in demand in the consumer market. Special equipment has been developed that has shown effectiveness, and there is a desire to open new points, but financial assets For further development not enough. This creates the need to sell a franchise.

After submitting an advertisement, the business owner receives offers of cooperation. A young entrepreneur who has startup investments wants to enter the market under the name “33 Bears,” which is known in his city. He is ready to pay for the process of joining the franchise network, make periodic payments after receiving a profit, use the recommendations of the parent company and work according to established rules. For this, he receives a number of advantages over new companies that are trying to conquer a niche on their own. “33 Bears” has already shown its effectiveness, so the franchisee has minimized risks and can operate using a proven trading business model.

There can be several options for cooperation - the franchisee produces waffles on their own by purchasing equipment, or simply sells them by purchasing products from the franchisor. In addition to production technology, he can use many years of experience, business support and consulting support from his partner. Thus, the franchisee skips the development process and minimizes risks.

Today's statistics in small business are disappointing: half of the companies that open in the trade sector stop their activities without even working for a year. Another 20% of the remaining ones are closed within 2-3 next years. In conditions of fierce competition and oversaturation of the market, the fittest, who has many years of experience or successful business systems, survives.

Popular and stable enterprises annually spend large investments on advertising, promotion trademark. A lot of resources go into informing potential client about location point of sale. When purchasing a retail franchise, the franchisor company most often supplies a brand book and advertising materials. Moreover, she is interested in promoting her partner - the franchisee, so she will provide all kinds of multi-level support. It often helps in forming a product line and choosing a location for a future outlet.

The history of the concept of “franchise”

The term "franchise" was first used in 1851. The founder of this partnership in the field of trade can rightfully be considered the Singer company, a manufacturer of sewing equipment. This was the first enterprise that began to sign agreements with partners for the right to sell and provide services for the company's products in the specified territory of the United States.

Singer founded a new distribution and advertising model at that time, which formed the basis of the retail franchise. After this, such a partnership began to develop in the automotive industry, during the World War it migrated to the hotel and catering business. But a big breakthrough happened in the 50s after the opening of the McDonald's chain.

In 2000, more than 8 thousand franchisors successfully worked on the global trade market; today this figure has increased to 18 thousand franchise sellers and more than 1,500 million franchisees.

How much does a retail franchise cost?

Those wishing to work as a franchise in trade will have to pay for the use of the trademark. The monetary equivalent depends on the pricing policy and requirements of the franchisor. But regardless of the specifics of the company, whether it will be or , all payments are of two types:

– one-time fee for working under the chosen brand. The partner pays for it when signing the contract. Its size depends on the specifics of the franchisor company. It can vary from hundreds of dollars to hundreds of thousands of dollars. The size of the payment is influenced by brand recognition and the scale of the business. For example, opening a supermarket will cost much more than launching a new cheburek.
Royalties are periodic financial deductions in trade from the franchisee's turnover. The amount of such contributions may also vary depending on the requirements of the franchise seller, as a rule, it is 3-10% of turnover.

Advice: It cannot be said that royalties and lump sum- This is exclusively the purchase of the right to use the brand. In addition, the franchisee receives support - consulting support, recommendations for opening a point (from the design of the premises for trading to technologies that simply need to be adapted to their conditions and requirements).

Advantages and disadvantages of franchise cooperation in trade

Franchising partnerships have both supporters and opponents. The great popularity of this business mechanism indicates a number of benefits, but like any other model, it is not without its drawbacks.

pros

For franchisees, the system of doing business under a franchise in trade means having own business, professional support. There are a number of advantages:

A ready-made business that practically guarantees a stable income. A partner can evaluate its effectiveness by studying the activities of the parent company. If she has proven herself in the domestic or even international market, is in demand, is actively developing, why not consider and purchase one of them?
Buying a franchise is a reliable method to master a certain niche in trade and expand your activities.
By signing a franchise agreement in trade, a partner receives the right to work under famous brand, there is no need to waste resources and time on promoting your company, conducting marketing activities. The franchisor has already done all this.
Support from the copyright holder - since the franchise seller himself is interested in the success of the new enterprise, he will provide comprehensive assistance, especially at first. The degree of support depends on the company itself, this may include staff training, provision of advertising materials, support in concluding a lease agreement, legal assistance and etc.
Providing the knowledge base and valuable information you need to get started. Not every aspiring entrepreneur who opens a business on his own can obtain such information - this is an analysis of the market, competitors, and consumer demand.
A franchise in trade is not only about instructions and work plans. Cooperation presupposes a constant partnership, which a newcomer so lacks.

Minuses

In addition to obvious undeniable advantages, the model is not without disadvantages:

Additional financial costs. Payment of royalties and lump sum fees can be quite high; this money could be used to develop your own business. Therefore, many do not want to overpay and open a business on their own.
Compliance with strict regulations. After signing a trading franchise, the franchisee must follow the established norms. They may concern not only the specifics of room design, but also the choice of assortment, client policy, and choice of suppliers. The franchisee may not like some requirements, but he is obliged to fulfill them.
Periodic quality control. Since the parent franchisor company cares about its reputation, it regularly checks the activities of its franchise outlets. Constant checks can slow down their activities.
Closed list of suppliers. Many franchisors specify specific suppliers that the franchise buyer must work with. In some cases, this is impractical due to geographical location or regional characteristics.
Possibility of unilateral termination of the agreement. If, in the opinion of the franchisor, his partner does not comply with the terms of the agreement, he can terminate it.

Save the article in 2 clicks:

A franchise in trading is suitable for those who do not want to start on their own and want to hedge their bets by receiving support from information resources more famous company. This means that in this case, resources are not needed to promote the brand, since the parent company has already done this. In this case, you need to sacrifice a certain amount of independence and give away part of your proceeds.

In contact with

A retail franchise is currently extremely popular among budding entrepreneurs in Moscow, St. Petersburg and other regions of Russia. This is explained, first of all, by the fact that the vast majority of them, trying to maintain their positions in the market, prefer to cooperate with more experienced entrepreneurs. For this purpose, they acquire various kinds of retail franchises. The period of financial crisis is especially advantageous for purchasing a boutique franchise. Beginning businessmen are also forced to buy a store franchise by the need to increase revenue, develop a stable customer base, and also reduce costs.

Those who decided to open their own franchising boutique retail, select the most suitable franchising in retail trade based on the size of the initial investment, the payback period, as well as the speed of reaching the break-even point.

Benefits of a Retail Store Franchise

The most important advantage for franchisees is saving their own Money. In addition, they enlist marketing, accounting, and legal support from franchisors who are already experienced in trading and have a certain influence in the market.

The vast majority of franchisor organizations provide free consultation and assistance in selecting and training employees.

It is possible for franchisees to create their own franchise networks. It is especially relevant in cases where it is planned to carry out work not only in large cities, but also in small ones populated areas. For franchisees, this is much more effective than joining an already existing franchise network.

Retail franchise catalog

The store catalog contains a variety of franchise offers from trading companies and boutiques for those who are planning to buy a trading company. The most popular franchise offers from retailers contained in the catalog today are considered to be the following:

chain of boutiques of linen and sheep wool products “Fashionable Sheep”;
auto parts salon “Korika-auto”;
salon men's clothing"Circle Boutique";
shoe salon self made"Migliori;"
network of auto parts stores for foreign cars “Avto-Koreets”, “Avto-Japanese”.

If you are interested in the offer of any specific organization from those presented in the catalog, then you can go directly from the catalog to the official website of this organization to obtain more detailed information about the terms of cooperation, the amount of initial investment, the amount of royalties, requirements for franchisees