Franchising – The Path to Entrepreneurship

Franchising activities are being used by business people to bring foreign brands into the Vietnamese market. In addition to the food, catering or education fields, in the coming time, the franchising business trend will also be utilized by the retail and goods distribution industry.

Start a business from franchising

Starting a business by buying or transferring business rights of big brands is a quite safe direction for young people who are passionate about business. However, not everyone has the conditions to make a profit on the existing chain model, because the costs are quite large.

To better understand the path of starting a business from franchising, we need to understand clearly what the advantages of franchising business will bring us.

#1 Minimize risks

One of the most important advantages in franchising business is minimizing risks to less than 10%.

When participating in the franchise system, the franchisee will be trained. Especially imparting management experiences and success secrets of specific types of businesses. That the franchisor has accumulated from experiences in the market. Franchisees do not have to go through the initial construction and development phase. The franchisor will instruct the franchisee on general principles.

Besides, the franchisor has gained a reputation for product quality in the market and promotional campaigns. Because of certain customer segments, franchisees will minimize risks in this regard.

#2 Use franchise brands

Today, on the market there are thousands of products and services with the same use value. But supplied by different manufacturers. Therefore, trying to create a famous brand. Being trusted and remembered by customers is a matter of survival for every business person.

Choosing a franchise business means you have chosen to start a business with a reputable brand in the market. The level of success is better when there is no need to spend time and money promoting the brand. Build trust and find markets and customers. You can take advantage of your brand to reach customers faster with a certain customer group. Expand further depending on your business management capabilities.

#3 Convenient and preferential when purchasing raw materials and products

Franchisees always receive special incentives on products, materials, and services. With good quality and guaranteed to meet brand standards.

#4 Take advantage of resources

The franchisee focuses only on running the business. The remaining part such as building marketing strategies, operating procedures, and business strategies will be taken care of and transferred by the franchisor.

#5 Management support, PR – Marketing

In this type of franchise business, the franchisee will not need to spend money and time on market development, PR, and advertising. Because it will be assumed and transferred by the franchisor.

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Things to note for a successful startup:

#1 Research the market carefully

If you want to invest successfully, you must clearly understand what the market needs and what it lacks. Is the product you want to sell saturated? For example, if you want to do milk tea business, you need to know the city. Ho Chi Minh City currently has 1,652 stores and the demand for milk tea has not decreased. Young people and office workers like to drink branded milk tea, but the number of stores such as Gong Cha, Ding Tea, Toco Toco,… is not enough, customers still have to wait in line to buy.

So is this your chance to step in by franchising? Solving the market problem is the first step for you to implement a successful business plan.

#2 Choose the right franchise brand

Once you identify the market, you start choosing a brand to franchise.

• Factors to evaluate options:
• Finance: To franchise a brand, we need to spend a significant amount of money. Therefore, you need to review your financial capacity to choose the right brand.
• Business efficiency: It is necessary to consider the necessary information to know how the brand you are about to invest in has actually performed in recent years. Survey franchised stores in the same city to evaluate whether profits meet your goals, as the franchisor guarantees.
• Culture: This is something to keep in mind when you intend to franchise from foreign brands. You need to consider whether the company's cultural values ​​are suitable or can be negotiated to partially change to adapt to the place where you are about to do business.

#3 Brand protection

Legal protection is very important, if you do not want to spend a large amount of money to buy a franchise, then after a while there will be a series of stores with the same name competing with you without having to spend a penny. Please check to make sure that the trademark is copyrighted and protected by law, to avoid losing money unfairly!

#4 Franchise fee

Usually for big brands that have been operating for several years, the franchise fee is already set and you can rarely negotiate a change. Unless that brand wants to expand the market and needs a partner to franchise, the chance of changing this fee is higher. However, it is safer to choose a company with a franchise fee that fits your budget.

#5 Unilateral cancellation of the contract

A franchise contract usually has a term of 5 years or more, so it is very difficult for you to want to withdraw, unless both parties seriously violate the contract. Normally there is a very short period called “Cooling off” of about 7 days for you to think again and withdraw, but this is in case you have not paid the franchise fee. If you quit halfway, a lawsuit will certainly arise, and you will lose the fees you paid and compensate the company for the expected profits during the remaining contract period.

Therefore, when the brand tries to force you to sign a contract in a suspicious way, you should carefully think again to avoid the situation of being unable to do anything else.

#6 No creative freedom

Franchising business means that you are transferred know-how, business processes, including the operating culture of the franchise business. Therefore, it is quite difficult for you to arbitrarily create new products or operating processes; your proposals must be approved by the franchisor. You need to pay attention to this to avoid getting into trouble.

#7 Passion

Franchise business is characterized by more than just making a lot of money. You need to be dedicated and passionate about your business, and willing to work with your employees to fully understand the real work that is happening. When you understand everything, you will communicate, manage, and inspire employees more effectively.