Understanding Franchise Business from A to Z
Many people know that achieving success in business can be done in various ways, one of which is by running a franchise system.
The following is a complete description of the definition, history, and intricacies of the franchise business.
Definition of Business or Franchise
According to Barringer & Ireland in his book published in 2008, franchises are rights to sell a product or service.
In general, the definition of franchise is a business in the context of marketing goods or services that have been proven successful and can be utilized by other parties based on a franchise agreement.
Basically, a franchise business is an agreement to buy the right to sell products and services from the business owner. (investopedia.com)
The business owner is usually called a franchisor or franchisor, while the buyer of a business license is a franchisee or franchisee.
Usually, the contents of the agreement in a franchise cooperation are: the franchisor will provide assistance in the form of using product brand names, production processes, operations, production equipment standards, human resources management, to financial management. Meanwhile, the franchisee is rewarded in the form of royalty payments on a regular basis.
History of the Franchise Business
The franchise system originated from business practice in Europe.
In the Middle Ages, nobles were given authority by the kings of certain regions to become landlords and use the land.
The condition is that nobles must pay royalties similar to the current franchise system.
In Germany around the 1840s, brewers franchised a number of taverns to become exclusive distributors in the region.
In America in the 1850s, the sewing machine company Singer began franchising its sewing machines, and spearheaded the franchise partnership. Even though the attempts were unsuccessful.
Singer was the first to introduce the franchise business format in the United States. Until finally followed by Coca Cola.
Another company to follow in Singer's footsteps was General Motors Industries in 1898. And eventually, the franchise was dominated by the fast-food restaurant business when A&W Root Beer opened the restaurant it started in 1919.
Franchise Business Law Instruments
In the 1960s-1970s, the franchise system in the US became a trend, so that there were many fraudulent practices selling licenses on behalf of the franchise business, even though its success has not been tested.
Until finally many investors failed. This was the trigger for the formation of the International Franchise Association (IFA) in 1960.
The establishment of the association is accompanied by a franchise code of ethics and supporting legal instruments as guidelines for its members, to create a trusted franchise business industry climate.
In 1978, the Federal Trade Commission (FTC) issued a regulation that required every franchisee who would make an offering to the public to have a Uniform Franchise Offering Circular (UFOC).
UFOC is a document that contains complete information related to franchise business opportunities such as business history, management, law, investment forecasts, and business concepts.
Tips for Starting a Successful Business for Franchisee
As a franchise license buyer, you need to implement various strategies to successfully manage a franchise business.
The main strategy is to choose a franchise business that is in accordance with the market potential. Then, identify the franchise owner's profile. Next, you need to look at businesses that have high projected profit gains.
One of the strategies that can be done to make business decisions and choose the right business is to visit the head office or franchise outlets that interest you.
It is important to choose a franchise that is in accordance with the financial capabilities and available capital. If so, learn about your rights and responsibilities as a business manager.
You also need to be careful and be aware of scams.
Franchise Business Support Technologies
The types of applications that support the franchise business to support the company's business system are:
Point of Sales (POS) applications
Digital payment technology or commonly known as the Point of Sales (POS) application can help franchise businesses to record and calculate product sales easily and quickly. This technology supports business operations to run smoothly.
Digital Marketing
Technology helps marketing activities in the franchise business effectively, namely through digital marketing, email marketing, social media, etc
Collaboration Application
Collaborative application technology can support the process of making and sending work documents to franchise branches in a practical and fast manner.
Applications usually provide a variety of file formats such as documents, excel, sheets or slides.
The integrated work device also provides other supporting applications such as email, drive, and calendar.
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