As a business and investment model, chain franchising has shown a strong development trend, involving catering services, beauty salons, education and training, audio-visual books, home decoration, clothing and accessories, entertainment and leisure, cleaning Cleaning and many other fields have become the most eye-catching and concerning business formats in China in recent years.

The chain operation method saves investors from the trouble of finding entrepreneurial projects and eliminates some of the troubles that individuals often encounter when starting a business. It is indeed a shortcut to success. According to a survey, 80% of independent store owners in the Japanese retail industry closed their doors in the first year, and only 8% survived until the fifth year; while only 20% of chain stores were eliminated in the first year, with 77 % of chain stores can successfully operate into their fifth year. A comparison between the two is enough to prove that franchising is to a large extent more stable, reliable and cost-effective than starting a business on your own.

At present, various chain franchise projects are emerging in endlessly. "Invest 5,000 yuan and become a boss easily", "Earn 10,000 yuan a day on surprise projects", "Invite you to join with an annual salary of one million yuan"... Faced with such attractive advertising slogans, many people are eager to give it a try, clutching thousands, tens of thousands or even thousands of dollars. With millions of funds, I want to join the ranks of chain franchises.

However, franchising is not as simple as people think. In the world of chain franchises, there are myths about huge profits and tragedies about losing everything. Therefore, in order to become a beneficiary of a chain franchise, investors need to be fully prepared. Otherwise, if you blindly follow the trend, you will end up beating your chest and crying, which will not help anything.

In order to avoid a recurrence of tragedies, first of all, the UK-China Entrepreneurship Lab reminds investors to eliminate the following three major misunderstandings:

(1) Anyone can open a franchise store

Many people believe that opening a franchise store does not require high academic qualifications and IQ for investors, and anyone is suitable. In fact, this is not the case. Opening a franchise store has certain requirements for investors’ character, ability, and experience. For example, you need to have a rational personality, good interpersonal skills and business management capabilities, and these factors determine to a large extent whether investors can succeed.

Therefore, investors should ask themselves several questions before joining: whether they have the passion to start a business, whether they have the potential to start a business, whether they are good at cooperating with others, and whether they have sufficient understanding of chain franchise operations.

(2) Investment once and for all

Some investors believe that after joining, they can just sit back and do nothing. Everything will be managed by the headquarters, and they just want to sit back and enjoy their achievements. In fact, this kind of pie-in-the-sky thing is impossible.

What the headquarters can provide to franchise stores is only a franchise operation model. Franchisees can only achieve success if they follow the experience and guidance provided by them and implement it step by step and practically. In other words, if franchisees want to succeed, they need to work together with the headquarters. Otherwise, even if the headquarters is working hard to guide and supervise, but the franchisees themselves do not make corresponding investments, they will end up among the losers.

(3) A guaranteed profit and no loss deal

Franchisees inherit the mature business model and enjoy services such as centralized purchasing, centralized publicity, and professional guidance, which will undoubtedly help improve entrepreneurship. success rate. However, returns and risks always go hand in hand, and there is no absolute guarantee that you will only make a profit but not lose any money. Therefore, entrepreneurs must treat franchising rationally and have a certain degree of risk awareness and psychological tolerance.

After eliminating the above misunderstandings, to ensure the success of chain franchises, the UK-China Entrepreneurship Laboratory reminds investors to pay attention to the following matters based on empirical research and analysis.

(1) Plan well before investing

Investors who intend to join the chain franchise industry, no matter which industry they choose or what kind of project they undertake, must proceed with a plan. How much capital you are prepared to invest, how much expected monthly income, how much profit, how much net profit, when the total investment can be recovered, etc. These issues must be planned in advance, and the more detailed the better. You must act within your capabilities, and should not determine the size of investment based on the size of the prospect, thereby making the investment exceed what you can afford. There are many things to be prepared for. Once failure occurs, there is no backup force to make a comeback.

(2) Carefully select franchise industries

The market is unlimited but business opportunities are limited. In recent years, there have been many new popular chain industries that have emerged, but many of them disappeared shortly after becoming popular.

Therefore, when choosing an industry to join, you must carefully evaluate whether the industry you want to join has good development prospects. If this industry is in the growth stage, it means that there are not too many competitors at present, and the entire market has a lot of room for growth in the future. The sooner you invest, the greater the possibility of profit, and the richer the experience you accumulate. The chance of making money is higher. If investors want to join an industry that has entered a period of competition and is too densely populated with projects, they must carefully consider and weigh the risks. In this kind of industry, not only the competition between brands is fierce, but also the competition within the same business district is in full swing. Good locations have already been taken advantage of by franchisees who joined first. If you want to join now, it will be more difficult to operate them.

At the same time, different industries have different market characteristics, business methods, etc. If investors have a certain understanding of the market space, business methods, etc. in the field they intend to join, coupled with the market appeal of mature franchise brands, If you have strength, you will be like a fish in water. Therefore, when choosing a franchise project, investors should have a well-matched concept and try their best to choose industries and fields that they are familiar with. When certain conditions are met, you can choose industries with high entry barriers, which can greatly reduce competition within the industry.

(3) Localized investigation of the franchise industry

If you choose the chain franchise industry, you must conduct a large number of local market surveys to analyze the local development of this industry and whether it has Practical issues such as compatibility, existing franchisees, location selection, etc. Don’t jump in blindly.

Ms. Liu is a franchisee of a children's clothing brand in Shenzhen, and her franchise store is located in Beijing. When she bought winter clothes, what she received was a series of autumn clothes, which could not adapt to the coming cold weather in Beijing. Upon inquiry, I learned that the headquarters' clothing was designed based on Shenzhen's weather conditions. Obviously, Ms. Liu was not careful enough when choosing and did not do compatibility analysis.

Mr. Wang saw a cleaning company’s franchise advertisement in a magazine and was very moved. After analyzing the current local conference situation, he believed that joining a cleaning company was a good opportunity. I made a phone call and after listening to the other party's exciting explanation, I hastily joined. It wasn't until he started looking for customers that he discovered that there were several local cleaning companies with strong financial strength that already had a good market share, but his own franchise store was still unable to open its business.

The above cases are all heartbreaking. If more investigation had been done at the beginning, it would not have ended in such a dismal way.

(4) Choose franchise brands carefully

You must be cautious when choosing franchise brands. If you just see the attractive conditions in the advertisement and see the beautiful company catalog and join in a hurry, it will often lead to regrets.

Generally speaking, the more competitive a chain brand is, the more complete its franchise system is, the stronger its financial resources and strength are, the better its development prospects are, and therefore it is more capable of ensuring Franchisees profit.

If you choose to join the headquarters of a weak brand, you can pay less franchise fees and deposits, but in comparison, you will enjoy fewer resources and help from the headquarters; therefore, many things depend on joining. If the store is managed by itself, its competitiveness will naturally be weaker. At the same time, due to the low franchise fee, the number of franchise stores often increases sharply, resulting in malicious competition among franchisees.

(5) Be discerning and sign the contract

Signing the contract is also a stage that franchisees cannot ignore.

In chain franchising, the contract is an important document to resolve possible disputes between the two parties in the future. Therefore, be sure to carefully read the content of the actual contract you are about to sign, and carefully check the corresponding terms and key points, especially regarding franchise fees, relevant constraints imposed by the headquarters on franchise stores, etc. Do not rush to sign this contract.

The UK-China Entrepreneurship Lab reminds entrepreneurs that franchising is a very competitive business model with development potential. It may have great financial prospects, but it may also be full of "traps".

The so-called success and failure are all numerous and unpredictable, and all of these require investors to be fully prepared in advance.

Source: Diandian.com