What is a franchise business?

increasing number of foreign expressions, phrases and words come into our everyday life.This is a natural phenomenon, because if a couple of years ago some term was unknown, but now everyone's lips, he turned out to be appropriate in the Russian lexicon and only took the vacant niche, surpassing the bulky and complex linguistic structure.All this fully applies to the term franchise - "privilege" which we did not so long ago borrowed from the French and is now actively used in domestic business.After all, a lot of newcomers and expressions found in the business relationship, which is very quick to respond to changing market conditions and is simply obliged by the nature of its activities to promote innovation in the mass.


However, not all companies are guided by their own principles of doing business and building its hierarchy, for some much easier to go on the trail network protorёnnoy leaders that provide turnkey solutions management.In simple terms, it is practiced only rent brand and its products with all the complexities of borrowing.As a result, open a business franchise sometimes a lot easier than to compete with a few players.Previously such business practices resorted to only a few - advanced nouveaux riches or experienced businessmen with experience in the organization of international companies, but now everything is different, and the activities of such a model is no surprise.As a result, talk about what is a franchise business, being everywhere.They compared the best-known examples of successful companies, to offer the market a universal model or multicultural activities which were relevant in all corners of the world.

first practical application

most striking example, which is rightly called the founder of the franchise, is the company "McDonald's."In general, it can be a success story envied by many companies, but it also found and instructive moments.It owes its popularity to the network is not McDonald brothers, who organized the first institution of fast food, and Ray Kroc - the humble errand, who had been selling equipment for making milkshakes.A landmark meeting that changed the life of the entire society, did not promise anything special.Ray Kroc went to a small restaurant meal and was very surprised to popular belief system in it - fast and cheap food, delicious hamburgers with soft drinks were just the format that the society needed to eternal lack of time.After talking with the brothers McDonald businessman offered to sell them the idea throughout the United States and concluded the world's first franchise agreement.Personal funds Ray Kroc was not enough to advance the cause, and he decided to establish his own house.After that fateful decision events are developing very rapidly: now the empire "McDonald's" has more than 30,000 restaurants and still gaining momentum, and the businessman - billionaire.

Activity data

little curious statistics on institutions that are found in all corners of the globe, and the 52-year-old little business, which has concluded a franchise agreement with the brothers, whose name is emblazoned on signs these restaurants:

  • In the 70 years of the twentieth century in the United States to food "McDonalds" citizens spent at least $ 6 billion annually.At the beginning of the twenty-first century, these values ​​reached a really huge numbers - over 110 billion $.These figures exceed the total costs of books, magazines, newspapers, music, video, education, leisure, computers and software together.
  • popular restaurant due to the fact that it focuses on understandable worldwide family values ​​and children's events.After all, the image of the clown Ronald McDonald is so recognizable that it can compete with a character known for thousands of years - Santa Claus Santa Claus.
  • not less than 90% of the new jobs that are present in the public domain in the US market, provides the well-known network.The "McDonald's" working every eight people.
  • costs of the advertising campaigns of the chain restaurants in the millions and remain among the highest in the world.
  • now open a business franchise, "McDonald's" is not as easy as before, but in the presence of 300,000 US dollars for the minimum payment it can be done.

What did Ray Kroc?

Businessman did not invent anything new, or modify an existing principle of customer service in fast food restaurants.It only took a perfectly balanced system of doing things at the McDonald brothers and leased it to later sell to other interested parties.All recipes of the restaurant, especially cooking, prompt customer service, training guidelines and the necessary equipment have been carefully studied and applied with the greatest efficiency in the metropolitan areas where they were more relevant than ever.

Comparison with Subway

To finally understand what a franchise business, it is worth considering the principles of its functioning in the real-world examples.Opt for the nearest competitor company "McDonald's" - Subway.They came closest to power-founder of the corporation fast food chains.


Basically Subway also focuses on small business - a franchise of this restaurant is sold in almost all countries of the world, and currently have more than 34 000 establishments.While at the same "McDonald's" only 33 000 points of sales.It would seem that a more extensive presence should lead to the leadership in revenue, but it is not.Annual revenue "McDonald's" is greater than the average volume of financial flows of its competitors in almost 2.5 times.

Specific examples

to dot the i, because the question of what is a franchise business, causes many misunderstandings, especially when it comes to the principles of its functioning in various spheres.Consider the common species in its other business areas.

principle of an open tourist agency franchise

on this organization has the responsibility for the implementation of leisure consumer.After the deductible is a travel agency in the sale and implementation of mediation between operators and consumers, for which the company receives their interest.The most obvious advantage of business cooperation between the two sides in the field of business is that the start-up company to minimize the possible risks.After all, the organization offers a well-known brand, which itself speaks for itself and is a kind of additional licensing company travel and guarantor of its consistency and reliability.However, if there is a choice - what better franchise travel agencies, you should note the following nuances:

  • lump-sum payment;
  • availability of monthly fees (royalties);
  • known organizations;
  • terms in business and its success;
  • staff;
  • number of partners of the company;
  • availability of information about the leaders in the public domain.

Many companies allow you to figure out these issues in the form of their online home page, or after filling out the questionnaire online.Then the representatives of the organization communicate with stakeholders and clarify all the details of cooperation.

car business with the acquisition of the franchise

vehicles with internal combustion engines, or other types of power plants are found on the streets regularly.It has long gone are the days when the car was considered a luxury - it is now the only means of transportation.It justifies its existence convenience of travel from point A to point B, and many happy owners can no longer imagine life without the "iron" friend.Therefore, service stations and service centers have become a very profitable business, liquidity of no doubt.After all, it provides a stable income and profitability and the prospects of its development in general is difficult to challenge.

The specifics of transport services

The service for auto franchise can be a great solution for those who are just planning their own business.However, it should be understood that such investment should be conducted wisely.For a franchise in this field offers a variety of packages - multi- or mono-brand.The fundamental difference between them as follows: while aiming at a single source contract allows you to work only with a particular brand of car and keeps business within corporate foundations focused on different manufacturers conducting business operations differently.

principle of doing things

Away from the big cities, where people prefer second-hand cars, infrequently encountered the same model vehicles.Therefore monobrand deductible for a small town will often be irrelevant (although there may be exceptions, as in the case with the Far East, where the majority of vehicles - import from the country of the rising sun), while in the big cities can successfully implement the project,which will be serviced by a single car manufacturer (for example, "Ford", "Toyota", "Mercedes" and so on).Thus, the services provided will be brought to perfection, and the flow of regular customers will have the best advertising for the station maintenance or warranty service.

Risk Warning

If you need to create an insurance company, the experts there is no need to explain what is a franchise business for the particular case and its importance in the service, where customer attraction is built on trust.After all, the organization of his own firm, which will assume the obligation to prevent or compensate for the risks, it is important to draw on the experience of skilled players, as nowhere is impossible to build liquidity, or the system is functioning properly.It is necessary to adopt the skills and principles of the largest companies or networks involved in the insurance of both legal entities and individuals.After compensation for property or other matters upon the occurrence of obligations shall be reimbursed by its customers to the extent that is provided by the contract.It was the size of a compensation and determine the insurance deductible.In the case of payment of the prevalence of it carried out as follows.Compensation is not payable if the value of the loss is less than the amount indicated in the contract.However, conditional franchise requires that the parties exceeded the approved financial loss the insured event occurs and damage is compensated in full.

advantages and disadvantages

Although the use of ready-made control technology is fraught with many positive aspects, it is necessary to consider the complex, as the legal nuances of the agreement have a significant impact on the success of the case and may require some revisions.Therefore, before signing the papers it is important to:

  • discuss aspects of the forthcoming activities with the auditors and consultants who are within its competence may give necessary explanations and recommendations;
  • soften the rules of cooperation and dispute settlement conditions;
  • display in the contract terms to make corrections by the parties that will fully adjust the terms of the franchise;
  • Provisions on mutual payment of costs and expenses;
  • exclude items that are recommended to hold a debate in the arbitration, which is a private matter and does not create precedents;
  • principles stipulate extension of the contract;
  • prescribe a course of action in case of force majeure and preferential terms for a period of reconstruction.

Under these important conventions of the positive business results will not take long to wait and will please both customers and owners, which took responsibility for the development of the case.