Franchises are key to entrepreneurship. But… Do you know exactly what they are? They are the permission granted by an entity to use its name, image, products or commercial activity. Today, with digitalization, online franchises work the same as physical ones. Do you want to know what profitable franchises are like ? Keep reading!
Franchising is a business model based on two pillars: a commercial relationship and a legal one. This means that the business model is not yours and that there is a legal agreement to use the brand.
Have you ever thought that an effective way to create a profitable business is to do it with franchises? We tell you why you should consider it and what the most profitable franchises are like !
Depending on the type of contract you number data establish, there are different examples of franchises . This means that opening a single location is not the same as expanding it to the region or selling only one product from a brand!
If you want to know what steps to follow to create a profitable franchise and which are the most important, keep reading!
What is meant by franchise
If you want to start a business, you can try to generate an innovative idea that is your responsibility in terms of aesthetics, products and decisions; or you can also choose to open a franchise. In short, a franchise is a permit that an entity gives you to use its image, name, products and commercial activity .
If you're thinking about it, yes, it has a lot in common with a branch. However, the biggest difference is that franchises combine the efforts of the brand owner and an investor. But... So how do you manage a business model of this type? We'll tell you!
How Franchises Work
Every profitable franchise follows 3 key moments that you have to keep in mind .
First: a franchisor that offers its brand (products, image and working method).
Second: a franchisee who pays for the rights to that brand and begins commercial activity.
Third: the franchisor ensures compliance with its brand standards and can add training, supplies, patents and more.
If you are going to invest in a franchise, you will become a “franchisee” or investor. While the person who owns the brand will be a “franchisor.” In this process, the franchisor will offer a fraction of the money to open the franchise but will not cover all the expenses.
Thus, for the duration of the contract, the brand will charge the franchisee a percentage. This amount varies according to the agreement. That is, it can be a percentage of the profits or a fixed amount.
Whether we are talking about online or physical franchises, the contract will determine how the raw materials or supplies needed for sales are obtained. What usually happens is that the owner provides the franchise with supplies, training, patents and everything necessary for it to operate.
However, the franchisee will also have responsibilities. It is key to maintain quality standards in production, customer service and payments to the brand owners.