"It is too difficult to start a business. I originally wanted to open a franchise store. I felt that someone would take care of me and I felt safe. However, I didn't expect that there are so many pitfalls in franchising. How should I identify projects and open a reliable store?"
everyone Anyone who wants to open a store will probably face a choice: Is it better to join a brand, or to start one by yourself? By joining
formally, franchisees can take advantage of the brand's reputation and gain influence while also gaining a mature supply chain system, a unified VI system, as well as a unified training system and service system, which can make the store's start-up stage smoother. . But at the same time, there are also disadvantages.
For example, if you spend a large amount of franchise fees and deposits, your future product portfolio will also have to be directed by the headquarters. The powerful headquarters will also require special promotions and so on according to the plan.
If you encounter an unreliable brand, sometimes you will lose not only the initial investment, but even the investment in the business process.
The recently exposed rights protection of Meicai.com franchisees is an example.
Meicai.com opened county-wide franchises last year and offered very attractive conditions: guaranteed income. As long as the target is met in the first six months, there will be an income of 500,000 yuan, and the headquarters will provide all-round support. The result of
is completely overwhelming. The project was not profitable, and the franchisees wanted to refund their money, but were refused for various reasons.
will share with you some common pitfalls today.
1. Seeing that the franchise store was making money, the brand wanted to change the contract and charge more for the franchise fee
In 2019, Xiao Liu started his catering business. Xiao Liu spent nearly 2 months in total from category market inspection and research to brand selection and research. He believes that the most important thing when opening a Bullfrog restaurant is raw materials. After comprehensive analysis and comparison of several brands, he finally selected a well-known Bullfrog chain brand. "This brand has a very powerful supply chain system ."
After site selection, decoration and other matters, Xiao Liu's Bullfrog store finally opened. Including franchise fees, management fees, decoration fees and other expenses, a total of nearly 3 million yuan was spent.
"The first store went very smoothly, and the restaurant was full every day." Xiao Liu said.
Due to his unique business philosophy, within half a year of opening the first store, Xiao Liu and his friends won the regional agency rights of the Bullfrog brand in Foshan .
At that time, Xiao Liu was running back and forth every day, making suggestions and preparing for the opening of the store.
Soon, their other two Bullfrog branches were opened one after another, and the business in each store was very booming.
"Three stores can sell 1,000 kilograms of bullfrogs every day." When Xiao Liu was thinking about how to expand the scale and continue to expand stores, he received a notice from the headquarters to change the contract: the franchise fee will be increased by 20%, and all new stores will Decoration must be done by people from the headquarters.
"After modifying the contract, our decoration price is 50% more expensive than other franchise stores. What's even more exaggerated is that if we don't agree, the brand will stop providing us with raw materials." It turns out that the brand knows that Xiao Liu and the others earn After spending a lot of money, he came up with this strategy to get a piece of the pie.
"We have invested tens of millions. If the raw materials are cut off and the store cannot be opened, the loss will be even greater." Xiao Liu was very angry. But in order to reduce losses, they had to accept the unreasonable demands of franchisees. Xiao Liu decided to get rid of the unscrupulous franchisees, sold his equity, and chose to create his own brand.
2. The brand advertises overwhelmingly, but after receiving the money, they leave it alone
Miss Zhang noticed a milk tea brand on a well-known boss reality show. The owner of this brand is very intellectual and is a returnee from overseas like Miss Zhang; the important thing is the brand. The tone is very bourgeois, very much in line with her expectations.
So, without hesitation, she came to the headquarters to inquire about franchise matters.
When she arrived at the Shanghai headquarters, Ms. Zhang found that there were many people who were interested in joining the franchise like her. All of them asked because they had watched TV programs.
"This brand is very well-known and the boss is so popular. First of all, we don't have to worry about marketing and publicity." Miss Zhang thought to herself.
Moreover, the headquarters also promised that if the franchise store encounters difficulties during its operation, the headquarters will provide unconditional full support. She was moved. A week later, Ms. Zhang came to the milk tea brand headquarters again and paid nearly 800,000 in franchise fees and management fees.
Then she spent nearly 1 million to open and decorate the store, and the milk tea shop opened successfully. However, a year later, Ms. Zhang's dream was shattered. She never dreamed that a big brand with advertisements on major TV stations would break its word.
"After receiving the money, the headquarters just walked away and left us to fend for ourselves." Ms. Zhang said.
It turns out that less than half a year after Ms. Zhang’s milk tea shop opened, the business began to gradually decline. As a last resort, Ms. Zhang requested support from the headquarters, hoping that the headquarters would send a supervisor to the store to provide guidance. After several months of urging, the headquarters still ignored her, and the information fed back every day was like nothing. "I paid the franchise fee and management fee. Isn't it the responsibility of the headquarters to supervise?" Zhang Meng was very angry. She concluded that there were no professional people at the headquarters doing these things.
3. The franchisee ran away
28-year-old Xiao Li is an employee of a tea shop in Guangzhou. He has always had a dream in his heart, hoping to one day own his own tea shop. While on vacation, he discovered that there was a tea brand on a commercial street near where he lived, and there was a long queue every day. The point is, this brand is recruiting franchisees from all over the country.
Suddenly, a small flame of entrepreneurship burned in Xiao Li's heart. To be cautious, he stayed nearby to observe after get off work every day. He found that the store had a good flow of people every day. Sometimes, he would also buy several tea drinks to taste. "Based on my many years of experience working in a tea shop, I think this brand's products are pretty good." Xiao Li's determination to join became even more determined.
The next day, Xiao Li came to the tea shop for consultation. The store manager enthusiastically introduced a series of relevant information about the brand to him. Later, Xiao Li was "escorted" by the company's dedicated car to the company's headquarters for inspection. He found that there were many partners like him who came to inquire about joining.
A product R&D director who called himself Yuan took them to visit the product R&D laboratory of the tea shop. The complete R&D equipment, thousands of square meters of tea storage warehouse, and the patient and professional introduction by the R&D staff made him feel quite reliable. During the exchange, Xiao Li learned that the sales of one of their stores can reach more than 200,000 yuan, with a gross profit margin of nearly 150,000 yuan. Xiao Li counted on his fingers and found that the gross profit margin exceeded 60%!
He was even more excited, imagining that in his hometown city, on the side of the road in the city center, there would be a store of his own, which would earn him a steady stream of wealth. Like many people who came to consult, Xiao Li signed the franchise contract without hesitation.
resigned and returned to his hometown. He spent nearly a month selecting a location and then renovating the store, spending nearly 500,000 yuan. However, when he excitedly called the headquarters, hoping that the other party would arrange manpower to help open the business, he found that the phone could not be reached. At this time, Xiao Li panicked.
had no choice but to buy a ticket and return to Guangzhou. However, when he went to the headquarters and tea shop, he found that the doors were closed. Xiao Li was dumbfounded. At first, Xiao Li was unwilling to accept reality. Later, with the help of a friend, he checked online and found that the company with which he signed the franchise contract was a company that had been cancelled, and the contact address and phone number on it were also fake.
At this time, Xiao Li realized that he had been cheated.
4. Guide to Avoiding Pitfalls
For entrepreneurs, “the sharpening of the sword makes it easier to chop wood”, so how to avoid the pitfalls of franchising?
1. Choose the right industry.
As the saying goes, "men are afraid of entering the wrong industry, and women are afraid of marrying the wrong man." You must choose an industry with a promising future.
You must start from reality and see if this industry is in line with your interests, abilities and ideas, so that you can continue to operate it for a long time.
Don’t even think about doing this or doing that. In the end, you may not be able to do anything, and you may not be able to do it well.
2. Find the right brand.
After you select an industry, you should check whether the credit of the franchise headquarters you choose is reliable. It is best to choose some well-known brands to join. Such brands are often more reliable and well-known, making it easier to carry out business.
When choosing a brand, you should base it on your actual capabilities. Don't blindly pursue famous brands, because the franchise fee will be relatively high, and don't look for brands that are free to join and have no reputation.
3. Look at the performance of directly operated stores.
You need to look at the number of directly-operated stores and operating performance of the franchise headquarters. According to the "Franchise Owner Information Disclosure Standards" of the Fair Trade Act, the headquarters must disclose the capital amount, number of stores, franchise fees, and subsequent rights and obligations to avoid the situation where franchise owners are unable to Disputes arise due to agreement with the headquarters’ sales management system, supply restrictions, trademark and technology usage regulations, etc.
Generally speaking, the number of directly-operated stores can tell whether the project really has market prospects. It is easier to examine its real profitability and it is easy to judge whether you want to join this project.
4. Complete franchise mechanism.
A complete franchise headquarters will have a complete franchise mechanism for franchisees, such as return mechanism, exit mechanism, profit guarantee mechanism, compensation mechanism, etc.
However, during the operation process, many imperfect alliance leaders clone other people's franchise mechanisms to establish a perfect alliance leader image for themselves, so franchisees should pay special attention.
Because once you pay to join, the headquarters can’t provide anything, and in the end it can only lead to your closure.
5. Sound training system.
The franchise headquarters should provide a series of sound professional training on management, marketing and other technical and industry knowledge, and at the same time provide follow-up technical guidance and training services to franchisees, so that franchisees can better integrate with the franchise headquarters. quality standards to continue operating.
Many franchise headquarters only look good on the surface and do not have a complete training system, so as a franchise owner, you should pay special attention.
6. On-site inspection of the headquarters and franchise stores.
This must be done. In addition to inspecting the headquarters' own direct-operated stores, we must also inspect several franchise stores that have joined to see if the franchise stores really benefit from joining. At the same time, we must also inspect the headquarters' stores. Relevant public reports can be used to see whether the headquarters has the strength to join the franchise and whether the operating performance is good.
7. You must read the franchise contract carefully.
Many franchise headquarters take advantage of franchisees not to carefully check all the terms of the contract, and use the contract to set traps, which deceives many franchisees and ultimately fails to win the lawsuit through legal channels.
Franchisees should carefully read the provisions of the "Franchise Owner Information Disclosure Standards" of the Fair Trade Act to protect their own rights and interests.
8. Improve entrepreneurial capabilities.
Many entrepreneurs are very rich, but the franchise headquarters does not allow them to join. This is because as an entrepreneurial project, it is not enough to have a complete operating model. It mainly relies on people to operate, so the franchisee’s Quality and resources directly determine the success or failure of a franchise project, so entrepreneurs must correctly conduct self-evaluation to decide whether to join a franchise. The
franchise is a good business model that allows outsiders to quickly copy the business model of a successfully operating brand in the shortest time and at the lowest cost, and embark on the road to wealth.
However, there is a mixed bag of catering projects on the market, including many scammer projects that specialize in collecting franchise fees, which has deceived batches of entrepreneurs.
Even if some projects are not meant to deceive people, in the end they are not strong enough to join, resulting in a lack of stamina for the franchisees and a dismal end.
