people think doing business franchise anyak is a definite step towards success. But in fact, a lot of reasons that make the business franchise ended there as predicted.
In the article that quoted from investopedia, we will look at some of the considerations that you can review before plunging directly into the franchise business.
1. the initial capital and franchise royalty that is high enough
Initial capital and franchise fee could greatly affect profits of tenants business franchise. For example, if you want to open a McDonald’s franchise, you have to have its own location (lease or property), not to mention the royalties franchise around US $ 45,000 to hold the franchise rights for 20 years, after the time runs out then it could be extended.
If dihitung-hitung in total, costs that you must remove it to open a fast-food restaurant McDonald’s have ranged from Usd 4.5 billion to $ 14.4 billion.
The most troublesome is the franchise fee, which must be deposited annually. Each year, the holder of the franchisees must deposit 12.5% omzetnya to the owner of the franchise. So, regardless of your or any omzet as good business, you will continue to be bound by this regulation.
The annual lease cost of this is the most standard terms in the world of franchising. In fact, Burger King requested an additional 4.5% if its franchise expenses reached Usd 450 million, same as Dunkin’ Donuts requesting additional 5.9% for the franchise fee in the range of Usd 360-720 million depending on the location.
Reduced salaries, food allowance and tax, can be seen that holds the franchise license is not as easy as it seems.
2. the cost of raw materials are expensive
For you can keep doing business, most franchise owners force the licensors to buy raw materials from pensuplai that usually there is still a special ‘ relationship ‘ with the franchise owners. Usually, the price is set by pensuplai is higher than the market price.
In fact, some fast-food franchise owners with a 5-10% higher than market prices for products such as vegetables, tomatoes or other raw materials. In fact, the vegetables remain vegetables that cost is usually about the same, but it became one of the other ways the franchise owner boost profits.
Don’t every now and then you cancel the order for raw materials from the franchise owners, because it is not impossible that he’s cut off your contract in the middle of the road so you no longer can do business.
3. lack of funding
Most franchise licensees do not have access to funding. So, if you need additional capital, most licensees have to koceknya own franchise. Practically, the franchise license holders rely on yourself.
Some franchise owners know this well so as to give the option for the installment of the franchise fee, initial capital, raw materials and equipment to start a franchise. Such situations are usually more interesting the prospective franchise licensees.
4. lack of location control
Some franchises have not too many rules for opening his shop in a city to avoid saturation of the market and the plummeting omzet. However, many also a franchise store opened in a city as possible in order to boost sales.
That’s why it is not something that is strange if you look at the five McDonald’s outlet in a radius of 8 km because his company tried to scoop up any money that is in the region. Franchise owners can profit a lot indeed, but the suffering is the outlet franchise licensees, because each appear one franchise in the same location, then omzetnya could be down to half.
5. Less creative
A franchise usually require uniformity. Starting from decoration shop, billboards, product offerings to her maid uniform must be the same. For people who like creativity, it can be frustrating.
So, if you are accustomed to being the boss for yourself, this may be difficult enough uniformity is done. You may not be suitable for selling the franchise.
6. the owner of the franchise less familiar new areas
You’ll often hear that the key to success in doing business are location, location, location. The reason, the location is very mentukan a success or failure of a business.
The bottom line, if you can’t find the right location to open a franchise, you will certainly be difficulties, because the franchise owners cannot much assist you in determining the location.
For example, a pizza franchise. You can’t easily open pizza outlets in an area that was quite a bustling population. However, you should also note the age levels at these locations.
A great one if you are opening in a neighborhood crowded pizza but the content of the elderly. You better look for a more quiet surroundings but the contents are all young people.
Research like this is usually not owned by the owner of the franchise. The franchise is the license holder to perform his/her duty