In this article you will know what is a franchisehow it works, the benefits, what you should take into account and which ones you can access.
In any major city and even in small cities you can find franchises on the streets. Chains like Starbucks, McDonald’s, and Walmart are everywhere for a reason.
Many entrepreneurs pursue this model because it allows them to run their own business while enjoying the benefits of having a well-known brand.
It all starts when a company sells the rights to use a business model and the products it offers to another person or company, a franchise is created.
What is a franchise.
Legally, a franchise is a contract between two parties that contains the following:
- The franchisee is given the rights to offer, sell and distribute goods and services associated with a marketing plan or business model pre-established by the franchisor.
- The franchisee’s business operations must follow the plan or system associated with the franchisor’s brand.
- The franchisee must pay for these rights.
You already know what a franchise is but that’s just the beginning…
What are the benefits of a franchise.
Buying the rights of a franchise enables the franchisee to enjoy the rights of an already positioned brand.
The products, marketing, advertising and design of the establishment are already included in the contract. All this combined with the continuous support represented in training and assistance in managing the business.
The parent company is not just selling the rights to use its brand, it is providing a business model that has already been tested and perfected so that it can be replicated without fear of failure.
The model includes processes and products that reduce the learning curve for the owner, managers, and employees.
While getting investment for a new company can be a complex task, since its business model has not been proven; for a franchise it can be an easy process.
Buying a franchise is considered by banks as a low-risk business.
What factors should you consider if you want to have one.
Acquiring a franchise requires significant investment. After paying the initial value, the franchisee can begin to establish the premises where his business will operate under the franchisor’s brand.
Before starting, the franchisee must propose a location, a business model and the opportunities of the agreement.
Once the terms of the franchise are agreed and approved by both parties, the entrepreneur can start. All these activities require more time and money.
While the appeal of a franchise is having an established name and a recognized brand; this will also limit your autonomy.
This means that all the decisions you make must be directed according to the guidelines of the franchise; which will sometimes prevent you from taking advantage of location-specific factors.
However, it cannot be denied that this model is still very advantageous for the entrepreneur.
A franchise can have rapid and sustained growth; it can be sold at a large profit; it can become family heritage; or even more businesses can be opened with the same concept.
Also, you can invest in franchises in almost every industry; making this model one of the fastest growing businesses and possibilities of success.
Now that you know what a franchise is, how it works, the benefits and what you should take into account, take a look at the following franchises in LATAM:
Colombia.
Mexico.
Peru.
Ecuador.
Argentina.
Chili.
Spain.
And remember, if you are really interested in creating your own business, you can read our book “How to create a company while working: Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
