FaB Caffe Coffee Frappe’ Milk Tea Snacks and Meals Franchise

Advantage of Franchising

Franchising Terms

Listed below are the terms that we need to be familiarized when considering buying a franchise. It’s good to be familiarized with these words to better understand the business model and the documents you’ll be reading when going to sign a franchise contract.

Franchisor – is the one who owns the overall rights and trademarks of the company and the one who gives the permit ion to its franchisees to use the rights and trademarks to do business. The franchisor charges the franchisee an upfront payment called ‘franchise fee’ for the rights to do business under the franchise name. In most cases, the franchisor also collects royalty fee from the franchisee.

Franchisee – An individual that is granted a franchise, as to market a company’s goods or services in a certain local area.

Franchise Fee – Is the cost of entry when purchasing a franchise business. This fee is primarily paid upfront to the franchisor by the franchisees for the use of the rights and trademarks of the business and is used by the franchisor to fund the initial support required by new franchisees.

Franchise Agreement – is a legally binding agreement which outlines the franchisor’s terms and conditions for the franchisee. The franchise agreement also clearly outlines the obligations of the franchisor and the obligations of the franchisee. The franchise agreement is signed at the time an individual has made the final decision to buy the franchise.

Trademark – is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities. A trademark is usually a name, word, phrase, logo, symbol, design, image, or a combination of these elements. - www.fab.ph

What is Franchising?

Franchising is one of three business strategies a company may use in capturing market share. The others are company owned units or a combination of company owned and franchised units.

Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an image in the minds of current and future customers about how the company’s products and services can help them. It is a method for distributing products and services that satisfy customer needs.

Franchising is a network of interdependent business relationships that allows a number of people to share:

In short, franchising is a strategic alliance between groups of people who have specific relationships and responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their competitors.

There are many misconceptions about franchising, but probably the most widely held is that you as a franchisee are “buying a franchise.” In reality you are investing your assets in a system to utilize the brand name, operating system and ongoing support. You and everyone in the system are licensed to use the brand name and operating system.

The business relationship is a joint commitment by all franchisees to get and keep customers. Legally you are bound to get and keep them using the prescribed marketing and operating systems of the franchisor.

To be successful in franchising you must understand the business and legal ramifications of your relationship with the franchisor and all the franchisees. Your focus must be on working with other franchisees and company managers to market the brand, and fully use the operating system to get and keep customers.

Other franchisees and company operated units are not your competition. The opposite is true. They and you share the task of establishing the brand as the dominant brand in all markets entered and reinforcing the customer’s familiarity with and trust in the brand. So in this respect you are working as a team with others in the system. Other franchisees share with you the responsibility for quality, consistency, convenience, and other factors that define your franchise and insure repeat business for everyone. Increasing the value of the brand name is a shared responsibility of the franchisor and franchisee.

An “ownership mentality” destroys the reason franchised and company-operated units are successful. Think about it. If you think you “bought” a franchise, you become an “owner” and begin to think and act like an owner. You will want to change the system because of your needs, you will wonder what you are paying the royalty for, and you will begin thinking of other franchisees as your competitors. For these and many other reasons you do not want to think of yourself as an “independent owner.”

As a franchisee you own the assets of your company, which you have chosen to invest in someone else’s brand and operating system and ongoing support. You own the assets of your company, but you are licensed to operate someone else’s business system.

Finally, your desire to become a franchisee must be grounded in your belief that you can be more successful using someone else’s brand and operating according to their systems and methods, than you could if you opened up your own independent business and competed against them. You want to look for a franchisor who is building a system of interdependent franchisees who are committed to getting and keeping customers, to growing faster than the market, to growing faster than the competitors, and to do all of that with high margins. When you discover a franchisor who understands this relationship, you have a franchisor worth your consideration. - www.fab.ph