Typology of "a cat in a bag". Not all franchises are equally useful.

I have been doing business security for a long time. The main direction is to check the reliability of companies before concluding transactions. But almost a year ago, the guys, "burned" on various franchises, started to ask me for help. And since my method of checking companies is quite universal, I, with a few modifications, decided to try it out on franchises. And in this way, they put me on a new line of “franchise check”.

During this time, I systematized all the accumulated information about the Russian franchise market, typical problems associated with franchises, and collected them into a kind of "catalog". So, then we will talk about what franchises on the market a potential franchisee might face, what lies behind them and what the potential franchisee expects to purchase such franchises.

Type number 1 "Ideal franchise"

In general, there are not many “Ideal franchises” on the market, and they are usually very expensive. Such franchises include Starbucks, McDonald's, etc. But these are exactly the franchises, which should be equal.

Ideally, a franchise is not just a job under a certain brand, it is clearly defined business processes, fully developed recommendations on the legal part, ready-made advertising layouts, scripts, etc.

That is all you need is to start working, and how to work and what to do - they will teach you, because the franchisor himself is interested in long-term work with you.

Key features:

  • Agreement of commercial concession;
  • Protected brand;
  • Full package of prescribed business processes;
  • The business plan is calculated in practice to the smallest detail;
  • Ready-made advertising layouts for all occasions. Sometimes advertising and promotion are done by the franchisor independently.

The main disadvantages:

  • The high cost of entry and investment;
  • As such, the absence or large restrictions in the freedom of decision-making on the promotion and development of their business. You solve only operational issues. But for someone it is even a plus.

No.2 "Sales franchise"

The true, and not delegated purpose of such a franchise is to establish a distribution channel for your own products with your own hands.

This principle was borrowed from MLM companies, where the product is always at the forefront. But MLM speaks about it openly, in franchising it is hidden, silent, or by other means try to get around the issue. I will not name companies, there are many of them on the market, but you can determine such companies yourself.

The classic example is that they sell you a franchise of street catering, but in fact they sell you equipment to organize a catering point. Or another example, you sell a franchise for the production of any product. In fact, your appointment is to buy raw materials from the franchisor. These are the cunning chains.

Key features:

  • The contract may be different: both the commercial concession, and the “know-how agreement” that has become fashionable, and the agency agreement [!];
  • The package of business processes is usually absent, or business processes are spelled out as recommendations, without a rigid framework for the franchisee;
  • The franchisor, as a rule, does not organize franchisee training, but consultants can be fixed;
  • Lures are possible - the absence of a lump-sum fee, but it is not needed, since you still have to buy something from them, as an investment.

The main disadvantages:

  • Since the franchisor’s main business is not related to a franchise, the business plan is based on theoretical calculations and marketing research, which is not always adequate in practice;
  • The franchisor himself has no experience in the business that he sells to you, does not understand seasonal changes, the influence of geopolitics on business and other macroeconomic factors;
  • Greater freedom in the development of your franchise business can both succeed and fail;
  • Binding to only one supplier, which again is only a plus for some.
Read also: Stop fighting for rubles: how to make profitable deals

Number 3 "Franchise-lifebuoy"

There is such an interesting category of franchisors on the market, who, in general, do not manage their own business, sometimes they reach the brink of ruin. But then a saving idea comes to mind - “And let's pack our business into a franchise, and we can attract additional funds to save our business from selling a franchise.”

In fact, such franchisors solve their financial problems by selling franchises, rather than scale a successful business model.

What is most interesting, sometimes there are such franchisees who have this business is much more successful than the franchisor itself. Fortunately, these franchisers can be seen immediately - any problems in the business do not pass without a trace.

See also: Customer leakage: how it threatens and how to reduce it

Key features:

  • I have never seen contracts of commercial concession. Mostly agency, but there are exceptions;
  • The presence of financial problems;
  • Weakly developed business processes, but as a rule there are none, there is only a brand book with materials for self-advertising. Because the franchiser itself has no business processes;
  • The business plan is based on real indicators, but exaggerated and embellished.

The main disadvantages:

  • The franchise business model is initially unprofitable. But maybe you're the same person who can bring this model to profit and bring to mind!

№4 "Franchise-idea"

With the current level of business education, even schoolchildren can pack franchises. I came up with the original idea, packed it into a franchise and sell it, earning money from it.

I often see interviews of “successful franchisors” who tell how they were driving a car, they got the idea, went borrowed, packaged the idea into a franchise, started selling, paid off the loan a month later and made a good profit.

But often these franchises make a profit in a narrow period of time, in the "season", and then the recession and ruin begins.

Key features:

  • It is here that the contract about anything has become widespread - the “know-how contract”, although under the contract it is generally not clear what exactly this “know-how” is in;
  • The franchisor is the owner of more than one franchise and does not have a clearly defined specialization;
  • The business plan is based on theoretical calculations;
  • All that a franchisee receives is a few vague guidance instructions and a brand book;
  • The owners of such franchises, by virtue of their mass character and fragility, do not bother at all with brand protection and trademark registration.

The main disadvantages:

  • The inability of the franchise, fragility;
  • The franchisor is not responsible for anything, does not assume any obligations and responsibilities if something goes wrong.
See also: How to create and distribute ideas

№ 5 "Franchise scam"

In general, this type of franchise is very similar to the previous one, because it is based on the same notorious idea, which has never been tested in practice. With one exception.

If in the previous case, the franchiser somehow tries to maintain the franchisee’s network, then the goal here is to “weld” quickly and disappear. In general, a typical, but difficult to prove fraud scheme.

Key features:

  • The franchisor firm has the "one-day" features, otherwise everything is the same as in No. 4.

Despite the large number of signs of "one-day", there are only two signs that will surely say that you are dealing with fraudsters: a false leader / founder and a dubious address. You will never find this company at the legal address, as you will never find the head / founder who is listed in the tax office. On behalf of the company, there will always be other persons by proxy, or even without it, you are unlikely to be invited to an office meeting, or the office will be located at a different address from the legal one.

The main disadvantages:

  • You have lost your investment before you even start working.

And finally, a small farewell. Of course, the franchise is attractive because you don’t need to invent something for yourself, you’ve already thought of everything for you and did it, just like those two of the casket, just make money. But today, a franchise is a fashionable investment option, which, alas, does not always pay off, so be careful when buying a franchise.

Watch the video: Typology in the 5 Sacrifices of Leviticus: How to find Jesus in the OT pt 18 (March 2020).


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