Franchising is worth it

Whoever has dreamed of baking their own bread but always balked at taking on the unforeseeable risks of the entrepreneur, should have a go with franchising. Franchising is a comprehensive partnership for mutual profit. It is a distribution system through which goods, services and / or technologies are marketed. The franchisee is a legitimate, independent businessperson who receives from the franchisor, the rights (and of course all obligations) to do business using the franchise operator's concepts. Amongst other things, the franchisor makes his Know How, strategy, capacity, organization and "tools" available. The franchisee operates close to the market and adds his cooperation with his initiative, performance, discipline, capital and any payable fees.

Thanks to the 70,000 odd directives in Germany, it can be somewhat daunting to take the first steps into self-employment for 'normal' entrepreneurs (individuals). A franchisor prepares the way for the franchisee and lightens the load somewhat. Even though the franchisee is not completely unrestricted when it comes to make decisions, he is a legitimate, independent and authoritative business owner. Therefore, franchising provides effective solutions for those who wish to be self employed, yet are missing a suitable business idea.

Franchising works on the idea that "A million seller only needs to be thought up once".

Origins of franchising

The roots of franchising can be dated backed to the middle ages. So called feudal tenures were comprehensive, hereditary usage rights to third party property.

The history of modern franchising began in the USA, i.e. Singer, Ford, General Motors and Coca Cola.

Franchising has been around since the 1920 in Germany , i.e. Coca Cola and Bosch Dienste.

After 1945, the USA experienced a boom in franchising. Today in the USA, there are over 3000 franchisors. Worldwide this number is over 12,000, whilst franchisees number in excess of 800,000.

The advantages of franchising

Benefits for the franchisee

• Use of a tried and tested concept
• Access to an already established brand
• Even people without market sector experience can get onboard
• Support from headquarter
• Belonging to a group allows for better purchasing conditions
• Exchange possibilities - you won't be left alone
• Benefit from huge national advertising potential through unity and networking
• Easier capital procurement from credit institutes

Benefits for both business and society

• Creation of new jobs
• Promotes a small and medium-sized business policy
• Equal opportunities - the great vocational training concepts available with franchising allow franchisees of the most different of backgrounds, the same chances to either re-enter the market or start anew
• Franchising provides consumer orientated and cost effective choices
• Consumers can rely on the quality of well known brand names

Benefits for franchisors

• Remain close to the market and attain a large share of customer acceptance
• Fast reaction and adaptation through effective communication
• Brand development and increases in the public awareness-level by exploiting a unified market presence
• Above average quality through clear structuring
• Advantages over competition through a national presence
• Faster expansion by franchisee involvement
• Increased business dynamics through motivated franchisees

Franchising has a future

Unbelievable but true. Everyday in Germany, 12 new franchise stores open their doors for business. In 1985, there were only around three dozen franchise systems in existence. Today, there are already more than 850 with roughly 45,000 franchisees. Another plus point: the number of franchisees who are forced out of business is very low. The number of closures in the first business year is around 8%, after which the number falls to almost zero. Compare this with free market enterprises, where seven out of ten new businesses are forced into closure. It's obvious that franchising provides a good basis for commercial success.