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Franchisee – an independent entrepreneur

8. 8. 2013

Franchising is a strong business trend in the Czech Republic. People participate in franchising with confidence because it's been proven to be a viable form of entrepreneurship in developed economies. It can cater to a customer demand for high-quality services. Franchises increase the purchasing power and the development of the competitive environment. On the Czech market, we record the development of franchise chains especially in segments of financial institutions, real estate, gastronomy, health foods, fashion, etc.

A franchise applicant will have set up an active form of product and service distribution, which will provide the franchise owner with a successful business concept license. The franchisee thus becomes an equal business partner to the franchisor and will independently run a business under his brand.

The experience from different projects confirms that in comparison to the centrally controlled chains, the franchise distribution chains combine many advantages: rapid expansion of a concrete business and brand, direct connection to the end customers and a high guaranteed standard of sales and services.

The key for a quick chain development is a professional selection of business partners. The suitable candidate must meet three basic criteria: have a significant interest in a long-term franchise entrepreneurship, have an excellent client and business orientation and the ability accept a certain amount of business risk including being able to put down an initial capital investment.

The competency model also includes other prerequisites, such as compliance with the rules determined by the licensor (respecting designated corporate design, suppliers, service standards, reporting) to maintain the concept uniformity. A reasonable approach ‘get advice’ is the surest way to adapt quickly as a franchisee in a new business. One's entrepreneurial 'innovations,' excessive creativity, mistrust in franchisor's experience, a reluctance to 'obey' the rules and poor cooperation with the licensor is an obstacle in successful entrepreneurship. The potential franchisee must be willing to learn new procedures and undergo training provided by the franchisor.

An unambiguous motivation of franchisees is a 'must' because it is the competitive advantage in comparison to standard employee chains. The motivation of a franchisee, who invests his capital into the business, is reflected in the high quality of services that are provided including building positive customer relationships and having a flexible approach.

The potential franchisee must be well established in the region where he wants to open the business. Having knowledge of a local market, potential customers, and knowing a candidate’s reputation fuel success. 

A franchise business is characterized by a relatively high level of certainty, but certainly not by a guarantee of getting rich quickly. It brings stable income and reasonable profits. The precondition is persistence, enthusiasm, diligence and an ability to overcome difficulties in the first few months of business until e.g. the branch generates enough operating profit and the first successes appear.

A franchise can be recommended to someone who has a family business. It is an attractive option for a businessman who hesitates between whether he wants to take on demanding employment in corporate management or a private business. He does not dare to run his own business; thus he decides to start a franchise, which combines the advantages of a large company (market power) and a small enterprise (regional market knowledge and the ability to manage a small team). He makes use of a proven business concept, which will get him 'turnkey,' he invests his capital and demonstrates that he can capitalize on his personal and professional experience. Then he will have franchisors' guaranteed expert support, training, and marketing. The risk of business failure is thus significantly reduced.

The selection and screening of suitable candidates is a professional process provided by an external contractor with experience in searching for franchise business partners. A practical cooperation with the client – franchisor and 'saleable' business model of interesting returnability and competitive advantage is a necessary prerequisite for a successful search.

Author: Marketa Hinkova
CEO at Motherboard – Consulting for Management and Business Excellence s.r.o.
Tutor at LIGS University