Finding a good business idea, ensuring its development and promotion is a difficult task, particularly for the new entrepreneur. One of the solutions which may make your chance is franchising.
What is a franchising?
In short, this action on the other and in accordance with its rules. More formally, the cooperation between independent entreprenur - the franchisor and franchisee (i.e. your company). In this model, the franchisor, a well-known brand and business experience, the right to use the name, logo, concept of business, patents, or the support of the promotion. In addition he shall assist with the choice of location for conducting the business, the purchase of equipment, appropriate zatowarowaniu and in solving problems in the course of running business. He also provides supply and even financial and administrative service. This is known as the franchise.
Please note that by deciding to franchise, you are an independent entrepreneur, you are self-employed and risks) are responsible for staff issues, financial statement with tax office, the ZUS and you pay the costs related to the business (equipment,). The turnover and profit will depend on your activity.
The franchise agreements are most common in catering, retail trade and services.
Possibility to work under the umbrella of a different brand will, of course,mean expenditures. Entry cost (necessary investment) ranges from several thousand PLN up to several million. The franchisor may set a minimum threshold of your investment, allowing you to act in his franchise system.
Costs will also include: Initial fee for the right to use the franchise and ongoing charges (typically a few percent of the value of sales) and contributions to the advertising fund (the franchisor is responsible for the promotion of the whole franchising chain). In some systems there is no initial fee. The way of calculating the fixed fee can vary depending on the franchisor (it can be determined in advance exact amount)
Entry in the franchise model of cooperation is potentially of great benefit. First of all, it gives opportunity to use brand, knowledge and experience, distribution channels, sales model, cooperation with suppliers, the system of promotion of the franchisee, who has gained market experience for many years. In addition, large franchisors are able to negotiate better conditions providers than if you need to negotiate by yourself.
Please note that stand-alone building and maintenance of the brand and the acquisition of entrepreneurial experience is a long-term process, with significant costs. If you choose to franchise, you will not have to bear these costs.
Prior to the decision to run a business in the franchise model, you should know that it has many advantages but also obligations. A large number of issues related inter alia to the concept of a company will depend on your franchisor. In addition to the regular payment for the franchise, you will have to provide the franchisor, inter alia, with financial statements. The franchisor will expect certain range of products, e.g. in your shop and certain look of your facility and the method of sales.
A further obligation will be to take part in promotion laid down by the franchioer.
In the course of cooperation, you will have access to a wide range of practical information, which is not patented, but is the result of a longstanding experience and presence on the market. It is know-how that you must keep secret.
A franchise agreement is so-called unnamed agreement. This means that its form and components are not strictly regulated by law. IIt should, however, contain the fundamental elements such as: the subject matter of the agreement, the parties to the agreement, the duration for which the agreement is concluded, the franchisor and franchisee's obligations, the conditions under which an individual franchisee can sell or transfer legal title to franchise operations, exchange of information/confidentiality, the review of the activities of the undertaking of the franchisee, method of dispute settlement and competent bodies. Important elements are the provisions governing the early termination of the contract.
It is also important that the franchisor has ensured that, where you work, there will be no other competitive point of the same chain.
Your the franchisor usually will be prepared a template for the signature, it is important to check whether you are able to meet (often stringent) conditions and whether the costs of cooperation will be to viable for you.
The basic elements of a franchise agreement were listed in the European Code of Ethics for Franchising (you can find it e.g. on the website of Polish Franchise Organizations)
In addition to charges under a franchise agreement you will settle taxes, social security and other duties so as in any other business. You are still an independent entrepreneur, you have to choose the form of taxation and settlement.
Doubts concerning settlements involve initial payment to the franchisor. In accordance with the tax interpretations, a one-off initial fee is expenditure on the acquisition of a licence and it is an intangible asset and legal entity subject to depreciation. For further information, see the guide Depreciation of fixed assets in the company.
The periodic payment may be included in the costs of activity.
Can the franchisor impose on his trade partners, fixed and minimum price of goods? No. Acting in the franchise you are still an independent entrepreneur who on his own and in accordance with the rules of the market sets prices. The franchisee may not impose a fixed minimum prices throughout the network: to do so would be a breach of the competition rules.
In accordance with the law, on the other hand, is recommending certain prices, provided that they are not binding for the franchisee. It is permitted to fix also maximum rates, provided that the trader can offer consumers a less expensive products or services.
Where to look for good offers of franchise?
The internet is obviously the most useful source of franchise offers. You portals or professional magazines, where offers are published and where you can find a list of the franchise systems in Poland. On the Internet you can also find information on the franchise fairs - you can speak there face to face to a representative of a franchisor. As in the case of other industries, seek advice from a trade organisation. In the area of franchising this is Polish Franchise Organization.
Try to cooperate with experienced and known companies that before starting cooperation will be able to give you a reliable calculation of your future turnover, information on the network condition, sales model, a sales promotion strategy. Don't be fooled by promises of an easy profit. Franchising will require work from you, as any other business.Share Print