Three Beware Of Franchising

The concept of franchising or franchising has been imitated by many Chinese businessmen after China's introduction to China. At the same time, the projects of franchising are flying all over the world.

Some businesses only imitate some surface forms of franchising, and some businesses have empty concepts and no practical operation experience.

These chain like affiliate projects that are similar in appearance and spirit are quite numerous in China. People who do not understand franchises are easily confused.

Take precautions against the first: beware of big money to join in the project. At present, there are some good chain operations in China (not necessarily franchising, but there are similarities in business mode), such as McDonald's, KFC, Starbucks and so on. Most of them come from abroad, which are larger investment projects, such as the investment of a McDonald's shop needs about 8 million yuan.

It is true that a mature franchising project needs a large amount of capital because of its high brand value and the establishment of a perfect franchise system. Therefore, the fees and royalties collected are higher, and the total investment is higher.

From this point of view, it seems that the larger investment projects have higher credibility.

In fact, the size of investment depends mainly on the cost and scale of the project.

A large investment project does not mean that there is a good profit model and a perfect franchise system.

For example, according to an industry source, the total investment of XXX coffee recently recruited is over one million yuan, and the franchise cost is several hundred thousand yuan. However, there is a lack of careful assessment of the location of franchised stores.

Such a phenomenon is related to the lack of corresponding laws and regulations for franchising in China. Therefore, the franchisees should be more cautious and not judge from superficial phenomena.

Two: over joining leads to vicious competition. To a certain extent, the relatively large number of franchised stores are relatively mature, but this is not absolute.

It may also be that after the development of the project to a certain extent, the lack of regional protection for the franchisee.

First of all, we should take a look at the regional distribution of these franchisees, and combine the profit status of the existing franchisees and the future development plan of the franchisee to judge whether the number of franchisees in the unit space is excessive.

If the number of franchisees in the unit space is too large, the profits of many franchisees are gradually declining, indicating that the owners lack reasonable planning for franchisees, and such a franchisee and franchise system are not trustworthy.

There are many cases like this. Recently, a film printing chain was accused of over chain problems. A 500 meter street could actually open 3 identical stores at the same time.

And a pure water chain store has been sued by the franchisees because of the problem of over joining.

Guard against the three: do not accept the franchise fee and do not make money at the same time. At present, many domestic franchises do not receive royalties or management fees. Is this good or bad?

Generally speaking, it is not a good sign not to accept the franchise fee or to collect royalties or management fees. It is very likely that the allies will ask the franchisees to buy large quantities of products or equipment, which is a disguised pyramid scheme.

Or, the allies are equivalent to wholesalers, but only to the franchisees, and seldom or no help to the franchisee's daily management.

Some such projects can make profits through their own efforts, but this is no longer a category of franchising, because it does not have the basic elements of franchise.

It is the essential factor for the franchisee to acquire a certain franchise fee, royalty or management fee to the franchisee through the pfer of his own business mode and the establishment of management system.

You have to invest more experience in fieldwork.

It is best to spend more than a month in that brand store and observe its profitability in detail.

At the same time, the general wholesale price of the product should be compared to the market. If it is found that the price of the goods supplied by the ally to the franchisee is higher than or equal to the wholesale price of the market, it usually means that it has a trick.