The,Franchise,Alternative,ANY, business, insurance The Franchise Alternative

As we all know to live in this world we have to perform some activity by which we can earn money. There are many activities by which we can earn money and meet the standards to live in this society. And from one of them is franchise.  Franc Small offices have unique needs, and thatincludes document shredding. Designed with the smaller business inmind, the Dahle 20314 is a cross-cut shredder that offers Level 3security and brings you into compliance with federal regulations. The

ANY new business involves risk. The proportion of newbusinesses that fail within their first two years ofoperation is much higher than those that succeed. Whetheryou can afford the risk of your business failing dependson your own individual circumstances. If you are continuingin full-time paid employment and your business is somethingyou start in your spare time for a little extra cash to seehow it goes before quitting your job, then you are morelikely to be able to afford the risk of that businessultimately not succeeding.But what if you've lost your job, taken a package, and arelooking for a business in which to invest the proceeds of yourpackage? All of a sudden the risk of your new business failinglooms very large indeed.One way of reducing that risk is to consider buying afranchised business.WHAT IS A FRANCHISE?Simply put, franchising involves the owner of the businesswhich is being franchised ("the franchisor") granting to theperson who wants to offer the products and services of thefranchisor ("the franchisee") rights to use its trademarks,business names, associated intellectual property, know-how,business systems, training systems and operating manuals inexchange for monetary payment in the form of an initialfranchise fee/purchase price and/or ongoing royalty paymentswhich are typically calculated as a percentage of thefranchisee's turnover.ADVANTAGES OF A FRANCHISE-> Proven systemThe franchisor has already done the work of establishing asystem for the business being offered for franchise. Thissystem provides you, the franchisee, with a roadmap tofollow, hopefully to success. The franchisor has alreadytested and refined all aspects of the business and hascreated a "business success formula" for the franchisee tofollow. This means that you are spared the trial and errorof working out what works and what doesn't and are thereforefreed to focus on "working the system", hopefully generatingprofits within a short period of time.-> Avoid many start-up problemsStarting a business from the ground up requires a lot oftime and effort just getting the basics in place. Theseinclude major undertakings such as developing a reputationin the market place, obtaining finance to fund the newventure and overcoming competitive threats, as well as themore mundane such as what business licenses to obtain andwhat insurance cover to purchase. The franchisor will havealready done a lot of this work. For example, thefranchisor will already have developed a reputation for thebusiness in the market place, will have identified competitivethreats and opportunities, incorporating ways of meeting themwithin the franchise system and will usually have alreadyestablished relationships with service providers such asfinanciers.-> Existing name and reputationAs stated above, you do not need to invest significant timeand effort into getting your business known in themarketplace as the franchisor will already have done thisfor the benefit of the group as a whole.-> Support when neededYou are not on your own when things go wrong. Got abusiness problem? Contact your franchisor for assistance.The franchisor will have employed many different specialistswithin its organization who are there just to assistfranchisees successfully operate their businesses. In my14 years of experience in franchising, the most successfulfranchisees were those who were not afraid to ask for helpwhen needed. The most unsuccessful were those who thoughtthey knew it all or, for whatever reason, refused to ask forhelp when they needed it.-> Group buying powerDepending on the size of the franchise network, the groupshould benefit from being able to negotiate favorable buyingprices because of their ability to generate volume sales forthe supplier.-> Group advertisingBy contributing advertising fees into a group fund,individual franchisees are able to benefit from much greateradvertising exposure than they could afford if eachfranchisee had to market their business on an individualbasis.-> Greater knowledge baseThe franchisor is likely to have invested in marketresearch for the benefit of the group as a whole. Thismeans the group has a much greater knowledge of theirmarket(s) than does the local "independent" competitor.The results of this market research can be put to good usein the group's advertising and marketing programs.DISADVANTAGES OF A FRANCHISE-> Restrictions on autonomyBecause you're buying the rights to participate in a proven"system", the franchisor will be concerned that allfranchisees adhere to the system and not operate outside it.After all, if franchisees are free to adhere to the system ornot as they see fit, there is no point in buying into afranchise at all. For this reason, for the benefit of thesystem as a whole, franchisors will generally impose strictcontrols on things such as the quality and types of productsand services that you may offer for sale, the types of localadvertising you may undertake, methods of dealing withcustomers, ethical conduct and the like.Although I've categorized this factor as a "negative", it canequally be viewed as a positive. As a franchisee, you wantto know that your franchisor is not going to allow its franchiseesto damage the reputation of the system in which you've investedyour hard-earned dollars.-> Pay initial franchise fee and purchase priceThere may be an initial investment ranging from a few hundredto tens of thousands of dollars to buy into a franchise.-> Pay ongoing royaltiesIn addition to the initial franchise fee and purchase price,most franchisors will also charge an ongoing royalty for therights to use the franchised system. These royalties areusually calculated as a percentage of turnover but variousother fee structures exist.-> Restrictions on ability to sell businessSome franchise agreements can restrict quite severely yourrights to sell your business to another franchisee. They mayimpose strict criteria for proposed purchasers and you mayfind it difficult to find buyers who meet this criteria.-> May not be able to realize value for business onterminationSome franchise agreements state that upon the expiration ortermination of the franchise agreement, the goodwill of thebusiness reverts to the franchisor. This means you may haveoperated and developed a business over many years and yet,when the franchise agreement expires, you effectively walkaway from the business with no further financial compensation.Under this type of arrangement you must understand going inthat you are expected to derive your financial return duringthe term of the franchise agreement by way of annual profits,not by way of a capital gain at the end of the franchise term.WHAT TO LOOK FOR IN A FRANCHISE-> An established franchise system with a good reputation.-> Comprehensive training systems for both your ownmanagement team and other employees.-> A relatively harmonious relationship between franchisorand franchisees. Some friction from time to time isinevitable in any long-term business relationship but aconstant atmosphere of hostility, mistrust and long-runningdisputes can be a warning sign of an unstable system.On the other hand, if you're looking at a franchise system of anysignificant size, a completely harmonious relationship betweenfranchisor and franchisee can be a signal that the managementof the franchisor is weak. Although a weak management teamon the franchisor side may translate into short-term personalbenefits for franchisees, in the long-term it undermines thestability and foundation of the franchise system itself and,ultimately, the value of your investment.-> Ethical business practices both by franchisor andexisting franchisees.-> An inclusive "partnership" approach on the part of bothfranchisor and franchisees. This does not mean that thefranchisor should not impose controls on the system but youshould look for a spirit of goodwill and cooperation,willingness to listen to others' ideas and a climate of opencommunication at all levels throughout the organization.-> Exclusive territories - although not crucial, exclusivityof territory (where the franchisor grants you a limited butexclusive territory which is yours alone) can in some casesbe a relevant factor to the competitiveness of the business.It would be fair to say that it does not benefit the franchisesystem if franchisees are forced to compete with each otherfor limited business.These are just a few of the major factors you should takeinto consideration when deciding whether a franchise isfor you. Although franchising minimizes the risks ofbusiness failure, it cannot not eliminate them entirely andany decision to proceed with a franchised business shouldonly be made after a thorough reading of the franchiseagreement and accompanying disclosure documentation andobtaining the professional advice of both your lawyer and youraccountant.------** Reprinting of this article is welcome! **This article may be freely reproduced provided that: (1) youinclude the following resource box; and (2) you only mail to a100% opt-in list. (Articles are no longer being made availablevia autoresponder due to large numbers of bounced mails dueto full mailboxes.) Article Tags: Franchise System, Franchise Agreement