Franchise Guest Post By: Carol Haas, Esq. | Boca Raton, Florida | Version 1
The recent popularity of the CBS TV Show, “Undercover Boss” is introducing more entrepreneurs to the world of franchising, showing both how a successful franchise works and where they can fall short.
Both the franchisor and the franchisee have their responsibilities, and if each does what they signed up to do, both can have a successful and lucrative business venture.
Why are franchises attractive to entrepreneurs? First and foremost, it’s the brand awareness.
Franchisors generally decide to franchise when their store or service grows in success and has developed customer loyalty.
Rather than starting from scratch, the franchisee can have a product that is already recognized for quality and service. And most likely, the product or service has been trademarked or service marked, adding additional value to the business.
Franchise Marketing, Support Is Key
A franchise also provides another short cut – marketing support. Chances are the franchisor has done market research and knows the most effective way to attract customers, both nationally and locally through advertising, public relations, and social media. And they can provide marketing tools that are tried and true.
In addition, a franchisee generally benefits from the franchisor’s buying power.
The Franchisor most likely has long standing relationships with suppliers which often provide lower costs of goods for the Franchisee.
Other advantages of buying a franchise include a greater likelihood of success than going it alone and help with selecting a location, signing a lease, initial training/ongoing support and possibly obtaining funding.
But the franchisor benefits equally from the relationship. They use franchisee’s money to more quickly grow their brand and add additional revenue streams.
Once they’ve created the prototype, it can be replicated many times over as a turnkey operation.
There can be bumps in the road for both the Franchisor and the Franchisee, but as demonstrated on “Undercover Boss,” clear communication between the two can create a successful opportunity for both.