Franchising isn’t a guaranteed way to success in business, developing the skills needed to manage a business is a key to success.

• The franchise you have taken will not necessarily make you profitable
• Identifying the needs of the people and changing the business model has become the need of the hour
• Successful business often depends upon your management skills rather than on the brand.

Aspiring entrepreneurs who want to avoid the high risk of failure associated with small businesses often look to franchising, assuming that a recognized trademark and support is a guarantee of success. The business model of franchising certainly seems like it should be a generally safe suggestion for those keen on seeking after business ownership.

Although it is true that franchisees have a higher success rate, it isn’t valid that they cannot fail. Franchises can come with a list of potential issues that can discourage profits, cause dissatisfaction, and drive owners out of business.

Buying a franchise doesn’t automatically guarantee success; commitment to developing the skills needed to manage a business is key.

Let us look at an example

Rahul wanted to start his own business. Rahul, with much thought, acquired the franchise of a reputed international school in his hometown. Initially, he deposited a certain amount for the franchise as a franchise fee. Thereafter, according to Franchisee’s rule, he provided for all the expenses of running a school. For example, building, teaching staff, school buses to bring children, etc.

According to the franchise agreement, the Quota of students is 60 for each class & annual fee for each child was fixed at Rs. 24000/-. Rahul has to cover all the expenses, such as franchise commission, children’s uniforms, teacher salaries, and transportation costs in this fee & earn profit as well.

The school started and he realized that the franchisee was not making as much profit as expected, because he did not get as many admissions as he wanted for in order to make a profit. He was rarely getting 30 to 35 admissions for each class. The fixes cost of running each of his classes was Rs.10000, in the first year, he had to suffer a loss of Rs.160000 in one class.
After much deliberation, he realized that the fee of each student is higher if he considers the standard of living of the people living in the location where his school is located so that the children are not attending his school. Even though its school was a renowned brand, accessibility was limited due to people’s financial circumstances. After completing one year, he had to resolve the problem as it would not be possible to run a school at a loss. He reported his difficulty to the franchisor, but the franchisor refused to cut his commission, citing the agreement. Now he had no choice but to close the franchise because it was not possible to run a school at a loss. Then after a lot of thought, he made the wisest decision in his life, he decided to start his own school with his own brand name. Because he had the whole set up of the school ready, the students, the staff, everything. He canceled the franchise as per the franchise agreement and withdrew the franchise fee amount deposited with the franchisor. He started a school named Sanskar International School. Afterward, he fixed the school fees rs.14000, taking into account the location, competition, and income of the people.

The second-year started and as expected he got the admissions of the full quota of 60 children in each of his classes. Now he is earning Rs, 8000 per student after deducting all fixed expenses such as student’s uniform, staff salary, transportation cost etc.

The place was the same, the situation was the same, the nature of the business was the same, then what exactly changed, the school, which was running a year ago at loss with high fees but, the same school is making a profit this year with lower fees. How did this happen, Changes are made only by adjusting the mindset and situation.

Lesson learned

The brand may not always benefit you.

It has often been observed that when buying a franchise, everyone looks at the brand, people have the impression that the brand is the key to success. But that doesn’t always have to happen. In today’s fast-paced world the market in which the franchisee’s business operates is constantly changing.
If a brand is successful in one city, there is no guarantee that it will happen in another city Because the brand’s success is influenced by the geographical location of the city, the interests of the people living, their living conditions, and per capita income.

Keep changing over time

Not every franchise model is going to be successful these days. If the Franchise Business model you adopted was not successful, do not give up, find out why it did not succeed and try to fix it. Because if a franchisee shuts down, it doesn’t matter to the franchisor, but your livelihoods might be shut down.
If the business you do is exactly what the customer needs but if your franchise model is unable to meet it, then change the business model yourself, because, in the end, the customer is going to meet its basic needs.
It is essential for franchisees to stay and keep themselves updated to successfully meet their customers’ needs. The franchises have to evolve accordingly, what customer wants, what they now prefer over a brand.

Summary:

Being a franchisee means having the option to go about as the HR manager, accountant and marketing guru, and everything in the middle.”No one wants you to succeed as much as you do, and there is no such thing as guaranteed success. On the off chance that you will possess a franchise, it is essential that you build up the financial and accounting skills necessary and back them with intimate knowledge of all the activities that make up the business.

As franchise consultants in Mumbai, we at Franchise Birbal always provide individual attention to our clients and help them to establish franchise businesses both in India and internationally. Franchise Birbal helps franchisees start, grow, and protect their franchises. By developing a franchise business with us you get the assurance that you will be able to establish your franchise business successfully. Our franchise consulting and legal documentation services start from Rs. 15000/-* onwards.

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