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b2b Magazine
29.03.2017 | Степан Максимов

The first steps in franchising

part 1 part 2     part 3

 

Choosing a franchise is the most important moment in starting your own business. The cornerstone of this business. Fearing to make a mistake, novice franchisees rush from side to side, trying to get information about the most reliable franchises: they ask for advice from experienced acquaintances, read reviews on special Internet forums for days and nights, and even turn to consulting agencies. But neither experienced friends, nor forums, nor agencies will help if you do not try to delve into the essence of the business you are interested in yourself.

 

Everything would be fabulously simple if a reliable adviser appeared at the right moment and said: "This is a great franchise, buy it, and in a year you are guaranteed to get a profit of 500%"! But this does not happen. Choosing a franchise is always a risk. Always. And the more attractive the terms of the transaction, the higher the risk.

This choice should be approached very responsibly. Do not buy the first thing you see, but think carefully about everything. There is always a lot of foam and garbage swirling around any worthy cause. Franchises are no exception. In this market, you can often meet those who call themselves a franchisor, but in fact they are an outspoken dilettante who still has to study and study himself, and not teach others. There are those who openly distort, posing as a franchise that is not a franchise, there are also those who mislead potential franchisees, embellishing their offer and hiding the shortcomings of the franchise. But among the franchises offered in various catalogs, there are also very worthy ones.

 

Where should a person who has the desire and capital to create his own business start?


You need to start with a thorough analysis. This is a big and serious issue, which is better broken down into several small ones. What is the purpose of creating your own business? In what area would you like to open a business and why? How savvy are you in this field? What is the level of demand for the type of goods or services you have chosen? Etc. When you answer each of these questions, a global answer will come to you by itself. Do not be afraid and do not hesitate to ask any questions in profile communities and forums, even if they seem naive or even stupid to you yourself. In the end, those who were ashamed to ask them, did not understand the situation and made a mistake remain fools.

 


Experience

 

There is a good parable: "A man with money and a man with experience met. A person with experience left with money, and a person with money left with experience.

 

None of the franchises in itself is the key to success. You can even break firewood with a "proven" franchise, there are plenty of bottlenecks. Your own experience is important.

 

Many people go into the franchise business not out of need and not out of a desire to develop, but out of boredom and a desire to assert themselves, choosing this form of business as the simplest, and not having the slightest entrepreneurial experience. What a sin to conceal, there are many young women among such, who suddenly received a couple of million. But before investing in, say, a mini-coffee shop, it would be nice to work for a year as a manager of an institution of this chain. Well, or a waiter, at the very least. There's nothing wrong with that, experience is the most expensive. But the mentality of a Russian entrepreneur (and just a Russian person) is arranged in such a way that profit is needed immediately, immediately, and a minimum of actions is taken to get it. If you expect a franchisor to do everything for you and bring success on a silver platter, then you should not buy a franchise yet. There is nothing to do with this approach either in franchising or in any other business.

 

Trust, but check

 

What should you pay attention to first of all when choosing a franchise? The most important thing is that the copyright holder has its own retail! There should be at least 5–10 own stores, the success of which can be easily checked. Moreover, it is best if the stores will be of different formats, both in the shopping center and in the street retail format.

 

The second most important point is the presence of 10–20 partner stores operating in the market for 1–2 years. It is very important to find an opportunity to personally communicate with these franchisees. After all, the best expert is the client. It goes without saying that the chosen franchise should also be known on the world market. But this is not always a prerequisite. Having an office, a legal entity working for at least 3–5 years, selling managers, product managers and french managers is also very important.

 

The franchisor's legal entity can be easily punched through the register of the Unified State Register of Legal Entities, this is open information. Guided by this information, it is possible to collect data about the founders and persons who have the right to sign without a power of attorney. Pay attention to the legal address and the date of registration. These data must be checked with the details specified in the contract. If a person who is not in the register of the Unified State Register of Legal Entities is indicated in the contract on behalf of the copyright holder, then a power of attorney for the right to sign such a contract must be attached to the document.

 

It is equally important to check the object of the contract itself (the object of intellectual property, the right to which is granted by the signed contract). The trademark to be purchased must be clearly indicated in the contract with the mention of the number in the register. You need to make sure that it belongs to the legal entity with which you are entering into a contract. Check the validity period of the trademark right and the list of persons with whom contracts have been concluded for this trademark. At the same time, see if there are franchisees in the register (if the copyright holder indicates in the advertisement that he has several active franchisees). In the registry, this may look like the registration of a commercial concession agreement with third parties.

 

Just in case, check the judicial history of the legal entity with which you conclude the contract. This can be done on the website of court decisions arbitr.ru .

All these checks can be carried out independently. As for the legal expertise of the proposed contract, it requires the involvement of professionals from the outside.

 

Svetlana Michan

Photo: Shutterstock.com

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