A franchise is a common thing. As long as you have a strong brand, you can lease intellectual property rights (IPR) to other parties.
This is different from opening a branch because usually, a business that is managed by another party does not involve you in terms of management.
To better understand this franchise business problem, let’s discuss it together in this article about the topic. After reading this article, you will easily understand the concept of a franchise business and various things about it!
About the franchise
If interpreted simply, the franchise is one party giving the RIGHT to use IPR for business purposes. The case of granting this permission will be governed by a contract with certain limits. Usually, the limit that is commonly used is to pay royalties for the use of IPR and also prohibits misuse.
In Indonesia, a franchise business is what is known as a franchise. You can check out famous franchises such as Popeye’s fried chicken or olive fried chicken. This brand inventor of recipes and menus allows you to open a fried chicken shop itself. But you have to pay for the contract and may not modify prescribed prescriptions or standard management.
Even if you pay for the contract, you can still enjoy the full benefits of the sale. Franchise owners also provide support such as supplying fried chicken ingredients, recipes, and even attributes for your fried chicken stall. Because there is strong branding power, franchising is usually a form of business that will become recognized more quickly than the generic fried chicken stalls under their own name.
Know the Meaning of Franchisor, Franchisee, Franchise Fee
Before discussing the concept of a franchise business, you must understand the important keywords in the business. In the franchise business world, keywords such as franchisor and franchisee are often expressed. If you don’t know what that means, you will find it difficult to follow this franchise business concept.
To be clearer, let’s first discuss the meaning of the franchise keywords below:
The franchisor is a business entity or individual that holds brand intellectual property rights. They have the right to give permission to use their IPR to others with certain binding conditions.
Franchisees are business entities or individuals that are granted IPR with certain conditions. This party usually submits requests to lease IPRs. But remember, even if given to use IPR, this tenant must continue to follow the terms and limitations provided.
The franchise fee is the initial fee for the franchise. This fee can be withdrawn because as a sign of rights have been given. In simple terms, it is similar to the general brand usage license level. A franchise is a concept similar to a license but is more about a business meaning and not a license to do something.
Types of Franchises
The next thing you have to consider in a franchise business is the type or type. Although it has more or less the same function and system, the regulations for each franchise are different.
Therefore, this franchise is divided into its own types or types. Let’s discuss each type of franchise below:
Foreign franchises are intellectual property rights that are created abroad but adopted by local entrepreneurs. Usually these franchises follow foreign regulatory standards and are more stringent in their requirements. Examples of these foreign franchises are Pizza Hut, KFC and Burger King.
This type of franchise is obvious. These franchise IPRs originate from Indonesia and are distributed by Indonesian entrepreneurs to other regions. Since this franchise is made domestically, the requirements are much easier. Popular examples are Geprek Bensu and Popeye Fried Chicken.
Benefits of Franchise Business
For those of you who already understand and are interested in opening a franchise business, there are several advantages that you can enjoy, including the following:
Support from the Franchisor
The things that make a lot of people want to open a business using the franchise line is that it’s easy. As long as you pay for the franchise fee package, you will be given some support. Starting from attributes, material supply to procedures for SOP management. Because you have this kind of support, it will be easier for you to start a business than those who have to build from 0.
Capital is not too big
If you become a franchisee, you also don’t need to be afraid of being burdened with too many fees. Usually when you want to use a franchise business, you are given a choice of packages. This package option is to make sure your business size can be big or small. So for those who don’t have a lot of capital, they can choose a franchise fee that is small and light.
Using this line of business, you can look at the performance of the franchise before deciding. Franchising is a business that can be successful if it has good brand strength. Without a strong branding effect, this business would be difficult to offer to customers.
So, before starting a franchise, you can take a look at the performance of your chosen franchise. If they are more popular and are sought after by the community, then you can be sure to become their franchisee. Because of these advantages, franchising can be seen as much safer than starting your own business in the first place.
Relatively easier marketing.
Since the brand name is well known, you certainly don’t need to over-marketing. When many people already know that the goods are quality, buyers automatically come by themselves. In contrast to the efforts that are still in the process of building a brand image. They have to pay more for promotions and convince customers to buy.
Thus the discussion about the franchise business. With a business model becoming a franchise is an opportunity to make the business much bigger. Make sure to use the knowledge from this article for your own business success!