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Franchising – An Itinerary To Entrepreneurship

The million dollar question today is not about who an entrepreneur is but about what makes an entrepreneur entrepreneurial. People are looking at new ways to experience entrepreneurship. In their quest, they have found out franchising as one of the key answers. Let me take you through how franchising is an opportunity for budding entrepreneurs.

Franchise model as an entrepreneurial route is very interesting because of certain key factors like flexibility of involvement, unrestricted domain choice and significantly higher success rates than start ups. Hence, it is extremely important to understand how to exploit franchising as a business option.

Franchising can be thought of as a method of doing business within an industry. The franchisor provides the knowhow, training and brand whereas the franchisee forms the front end, responsible for managing the business unit. It is a win-win situation for both.

Franchising has been successful in promoting entrepreneurship among people. Entrepreneurs from middle class background opted for franchising and have found it to be useful as they were associated with big brands without that high an investment. Looking at the macro view, all the franchisee owners work towards a common goal.

Let me give you some reasons that boost the idea of franchising as a route to entrepreneurship:

Proven track record and less failure: Statistics reveal that two thirds of startups fail within three years of being established. On the other hand, the success rate of franchised business is about 90%.

Brand name: Getting a foothold in the market is very difficult in today’s competitive market. But being a franchisee owner, you have the advantage of using an already well established brand and trademarks. Advertisement and promotion by the franchisor has direct benefits for the franchisee.

Support: The franchisor provides training and helps in overcoming problems in business.

Finance: Banks normally sanction loans to franchisee owners more readily than to start ups. The franchisor helps the franchisee to procure loans for setting up the franchise.

Wide range of options: Franchising offers a wide range of options and alternatives. The entrepreneur can choose depending on expertise, interest and resources.

Suppliers and Customers: The suppliers are already established when a franchise opens. The brand already has loyal customers and they are assured quality service and products, making it easier for the entrepreneur to get more customers.

Franchising is found in almost all the major sectors, but the sectors which consider franchising as a growth vehicle are food & beverage, education & training, clothing, retail, etc.

Typically many issues are associated with franchising business, ranging from legal contract, financial deals, relation between franchisor and franchisee to support system and delivery. This is very structured in a country like USA, but in a country like India, the unstructured nature can cause undesirable consequences to both parties.

With success stories of many franchising units doing the rounds, franchising is slowly permeating into the entrepreneurial mind. Brands like Pizza Hut, Subway and McDonalds have created a global footprint with franchising. In countries like India, franchising is slowly gaining a foothold. There are over 5000 franchisees in India, with the total turnover touching 14000 crores. Becoming a national or international brand is an easier, safer and profitable way than struggling for brand identity.

The growth in the franchising industry is inevitable because of its unique and flexible style of business. Budding entrepreneurs have latched on to this opportunity. The only setback that needs to be resolved is to have a proper framework in place and smooth franchisor franchisee relations. Franchising is on its way to reach insurmountable heights.

To read more about opportunities for entrepreneurs in Africa Click here .

For more information about IT franchising, contact:
Sandeep Kumar

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