How to Reduce franchise risks?

Franchise chains are often seen as shortcuts to success. According to statistics, 5% (about 25 thousand) of franchise stores are closed every year in the United States. In China, the operating system is not sound and the capital turnover is not working properly, there are also a number of examples of cross-franchise stores. Therefore, before entering the franchise system, you must think carefully about the following five questions:

First, how do I start the joining relationship? Most joining relationships come from existing enterprises. When the owners of an industry develop multiple stores independently, they usually consider using others' funds to expand their enterprises, when an independent owner agrees to use its specific trademark, product, service or the system, the franchise relationship arises, and the franchisee will be charged for the franchise fund, regular right, and other expenses.

Second, what is the potential of the franchise market? Franchise chains are an important means of business growth. In 1991, the total number of stores in the United States totaled 0.54 million, with a turnover of 757.8 billion yuan, accounting for nearly 1/3 of the total retail sales in the United States. The number of employees reached 8 million, which was predicted by John neesbi, author of "General Trend: "by the 21st century, the turnover of the U.S. franchise market will reach 50%", which shows that the development prospects of the franchise business are promising.

Third, how to become a franchisee? The first step of joining is to confirm the status of each joining system. You must evaluate and analyze the quality of each franchise system, select the conditions that best meet the individual's needs, and then directly contact the company to collect relevant information such as the franchise introduction and instructions, and determine whether the company is suitable for joining.

Fourth, What should I know before joining? Before joining any system, the Franchisee should contact the franchisee and the existing franchisee. When you contact an authorized person, you must provide the following information: the competition status between the industry, the detailed list of various expenses payable for joining, the qualification requirements of the franchisee, the initial investment cost, the conditions and rights for suspension or transfer, and the content of the draft contract. When visiting an existing franchisee, you can ask them to provide the following information: profit status, cooperation between the franchisee and the franchisee, investment status, and FAQs after joining. In addition, it is necessary to consult a lawyer about legal matters in the contract for future use.

Fifth, how much does a new franchisee usually pay? The investment cost for joining is usually not low. Taking the United States as an example, the initial franchise fund is between USD 5000 and USD 35000 for different industries. The monthly premium is about 3% to 7% of the monthly turnover, and the advertising fee is about 3% of the monthly turnover. In addition, the franchisee sometimes has to pay 3% to 8% of the monthly turnover based on the actual situation as the equipment and land rental fee.

To enter the franchise chain industry, you must evaluate the franchise chain system carefully. According to past examples, some well-formed franchise chains or financial crisis, credit expansion, and investment Conversion failures have fallen from peaks to valleys, affecting the situation, it is a consortium.

Before joining, you must clearly know what your starting point is? Is it a well-known trademark focusing on franchise headquarters? Or does it take a short time to develop a franchise store? Or can it quickly and effectively accumulate management experience?

After statistics, the benefits of participating in the franchise operation can be summarized as follows: the franchise system provides a well-known brand that attracts customers and takes a short time to develop the franchise store, the franchise system provides a business operation formula that has been verified. The accumulation of management experience is quick and effective and can be trained to increase the possibility of successful self-running business in the future, higher job satisfaction than paid employees, lower risks than independent individuals, lower purchase costs, and more independent autonomy than paid employees, through the franchise system, the business is easy to expand and can be eliminated. The investment is less than the independent operation, the cost of opening a shop is low, and participating in the franchise is more profitable than independent operation.

As for the methods for evaluating the franchise chain, there are different opinions. Among them, the four evaluation items proposed by the American Association for franchise chain (IFA) have the most reference value: financial performance, company growth and management quality, company stability, and the quality of getting together between the Headquarters and the franchise stores. In addition, pay attention to the attitude and service of joining the headquarters, and the evaluation of the relationship between the Headquarters and the franchise.

As for the company's growth, management quality and financial performance, it can be determined by its operation status. Only companies with room for growth can maintain product innovation and competitiveness, the stability of the company can be found through newspapers, magazines, or manufacturers. The number of stores is unstable, the turnover rate is high, the finance is highlighted at a red light, and the franchisee Trust Index is insufficient, the Foundation is bound to be loose and scattered. As long as the franchisee pays more attention to it, it can reduce the troubles caused by future cooperation.