The Morning Eclipse

Sunday, April 29, 2007

There is good cause to getting a franchise

For the past years, franchising has been very popular with entrepreneurs and there is good reason for that!

Starting a business is NOT easy. Take the example of this food retailer. For months they have done their research and preparation for the opening of their first outlet. They have done proper diligence in the location and they have negotiated for weeks for a solid contract.

However, things do not turn out as expected. There are internal and external factors that come to play. For this retailer, there are three immediate factors. 1) Location 2) Supply 3) Control

1. Location
Even with weeks of study and months of oberservation, this retailer failed to discover that vendors in front of their store are fiercely against moving out. The area's vendors even have banded together as an association and is illegally squatting on the sidewalk and building corridor.

The problem of the retailer is the decrease in exposure. His location though fronting the busy street gets covered with all the umbrellas and canvas setup by the vendors The premium he pays is lost.

2. Supply
During the early days of operation, the reception of the public to the product is still being observed. There has been days when demand peaked at lunch and some days where lunch sales was plain disappointing. Now the supply of the product becomes a problem. When orders increase, the outlet is unable to supply the demand. Customers are regretfully turned down due to zero supply. Delivery is questionalbe as well. As the first branch's inital days, the retailer has not set any delivery schedule yet.

3. Control
This is the easiest to teach but difficult to implement. Control is about being sure that there is no theft, within or without the company.

During our retailer's first days, inventory control and money control are of primary concern. Money has to be collected and inventory has to be accounted for. Even with regular monitoring and previuos instructions, the staff STILL need to be constantly reminded on the inventory regulations.


Now these three factors would have easily been solved for a franchisee. A good franchisor has the experience and knowledge behind his business' concept and operation.

Take the Location factor as an example. Having previous experience with shady characters and locations, the franchisor will be able to point out to franchisees the possible dangers and scenarios of a location. He can share experiences and insights into a target location. Armed with this knowledge, the franchisee can make preparations for problems or dangers associated with his intended location.

The supply factor is the easiest to solve. A good franchsor has the infrastructure, system and logistics support to solve supply. Since he is already operating several company owned branches, there are already delivery trucks, delivery personnel, commissary personnel and other people working daily and following the company's systems. Sudden orders coming from a baby branch is easily solved with one phone call. The warehouse can easily release stocks for delivery while delivery trucks can easily change course to drop the impromptu orders at the new branch.

Lastly control is solved faster. With experience on his side, the Franchisor can train in advance the people necessary for the outlet. Training is the advantage of an established organization. Small startups may not have the resources to setup a training course especially when their own systems are not yet finalized.


Franchising is like a business-in-a-box product. You open the box and the business is ready to operate on day one armed with the experience of the franchisor. This means for people who do not have the time or the patience to prepare as a startup, then franchising is the way to go. There is less headache and money loss involved with franchising. Time is saved, money is saved and everyone is happier.

Success is 1% inspiration and 99% perspiration. Never tire.