Franchise: A decision Making Approach

What could be more effective than expanding at a faster rate than setting up your shop at a fraction of the cost, well the answer is a franchise of course. Well before we go into the merits lets see what a franchise actually is: A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. An individual who purchases and runs a franchise is called a "franchisee". The person/institution who sells to the franchisee is the "franchisor. The franchisee must pay a franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor. Whats the advantage? 1. Free Brand Recognition: Mega-brands like McDonalds and Dominoes have spent crores on their brandings and logos and the franchisee gets to take full advantage. Thus you get instant public attention. 2. Free Advertising: Advertising can be one of the biggest expenses for any new business and by opening a franchise you can side load on the parent companys advertisements. 3. Free Legal and Corporate Aid: There are designated legal departments in parent companies that take care of the inevitable issues like lawsuits, accidents, and difficulties with employees. 4. Free Training and technology transfer: Ongoing and online support is always available as well as special alerts and continuing education. Franchisors want you to be successful and they make themselves available every step of the way

Steps to Buying a Franchise:

It looks as easy as 1-2-3 pay forget and earn for life, but it isnt and heres why

Step 1: Evaluate your options!

A franchise can be a real test of your skills and market adeptness, so take a sector which you have experience in so that your insight can lead to business differentiation at later stages to have a unique identity of your own franchise.

Step 2: How will you finance it all?

There are a number of start-up and ongoing costs associated with setting up and running a franchise, including: The initial franchise fee this is what you pay the franchisor to use its business systems and trademarks. Opening fees these include fees such as training-related expenses, business permits, etc. Capital investment securing a location and/or equipment in accordance with the franchise package specifications, you may have to buy start-up inventory. There will be other, not-soobvious costs too, such as insurance, property taxes, accountant and legal bills, and even zoning fees. Working capital the money youll need to survive the initial start-up phase, including training, until business revenues begin to grow. You may have to pay employees before the business makes any money.

 Continuing fees in the form of royalties, management service fees, advertising and marketing. Unless you're sitting on a mountain of cash, start this process early on because the answers can be quite different from what they were just a few months ago.

Step 3: Evaluate industry categories

Take a listing of franchise opportunity segments from http://smallb.in/franchise-opportunities-india and match with investor sentiments like on http://www.investmentnetwork.in/ to gauge the viability of the segment in the current scenario.

Step 4: Look for future Analysis of the Segment/ Market trends:

Look for industries like service ones (hair saloons), fast food (McDonalds) which are able to tide over even in times of recession to make your investment future proof.

Step 5: Start identifying individual franchise companies

Now that you are sure of your sector and investment opportunities tied with that, you need to identify the franchisors in each segment which will give you the best bang for your buck.

Step 6: Request preliminary information from franchisors

Go to franchisor websites like http://www.justfalafel.com/franchisee or walk into a corporate office to get information and business details about the project. Step 7: Study the FDD After your initial contacts and the submission of a qualification questionnaire, the franchisor will typically provide you with its Franchisor Disclosure Document (FDD), an FTC-mandated disclosure document. The FDD contains extensive information about the franchise, including the history of the executives, any litigation the company has experienced, the names and contact information for the current franchisees, and a copy of the franchise contract. Review this information carefully and get any questions you have answered before you proceed to the next step.

Step 8: Call existing franchisees /Angel Investors

Make sure the franchisor is not over selling itself and get to know the ground reality.

Step 9: Discuss Final Terms with Franchisor

Now that you are sure of the market conditions and viability, its time to discuss terms and royalties with the franchisor and get written assurances of commitments.

Step 10: Make a Buying Decision:

Make a final decision keeping in mind the knowledge gained from the past 10 steps: Does the franchise decision

Matches your financial resources Provides you with the lifestyle you imagined Uses your particular skills and experience Provides a recession-resistant product or service Has a majority of happy and successful franchisees

Employs an experienced and enthusiastic staff of personnel who will help you achieve your dreams of business ownership success

Franchise Proposal- SPEED CARWASH

SPEED CARWASH is a concept developed by LIV INDIA to organize the Car Cleaning segment to give the community a new definition of car care and detailing services which are not professionally followed in India. It is a unique mechanized car cleaning concept where cars are getting pampered by the latest equipments including high pressure cleaning machines, spray extraction machines, high powered vacuum cleaners, and steam cleaners and so on.

Steps to Buying a Franchise at Speed carwash:

Step 1: Evaluate your options: With over 35 million vehicles on the road in India, the 5th largest in the world and ever increasing @ 10% every year and is estimated to become 3rd largest by 2025 and no.1 by 2050. To clean these many vehicles there is no dedicated service. Carwash is a traditional industry in India, handled by authorized service centres and privately owned garages. So theres a scope for organized players in this segment. Step 2: How will you finance it all?
Costs associated with setting up and running a SPEED franchise are, The initial franchise fee 12-15 lakhs Opening fees included in initial fees Capital investment based on location rent etc, infrastructure provide in franchise fees. Package specifications - machines and technology and infrastructure (civil + electrical + plumbing). Working capital 5-7.5 lakhs(Industry estimate for 3 months) Continuing fees No, no continuing fees, brand enhancement expected. Total Estimate: 20-22 lakhs initial investment.

Step 3: Evaluate industry categories

Take a listing of franchise opportunity segments from http://smallb.in/franchise-opportunities-india and match with investor sentiments like on http://www.investmentnetwork.in/ to gauge the viability of the segment in the current scenario. Now the question arises should I start up a self-promoted car wash Research Development Business Model Success Rate Brand Training and Support Infrastructure and support Time Frame to Establish Returns Self-Promoted Very Costly Risky 10% Yet to Be Established No Costly Long Inconsistent Franchise Available at reasonable cost Tried and Tested 90% Well Established Yes Included Short Consistent

Step 4: Look for future Analysis of the Segment/ Market trends:

Car wash in general is able to tide over economic downturn, it can be coupled with additional chauffeur and door pickup facilities to make it a customer centric service.

Step 5: Start identifying individual franchise companies

Other viable alternatives exist like express car wash and unique auto care But they dont offer 1. 2. 3. 4. No loyalty cards or discounts cards offered No customer lounges thus bad experience 22.5% of cars comes with scratches, no horn working, water in the tail light and noise in the Engine Internal cleaning is not up to mark.

Moreover speed carwash has a pre-established reputation in servicing Car dealerships and Local business and hence the business opportunities with speed car wash is more.

Step 6: Request preliminary information from franchisors

Go to franchise website http://www.speedcarwash.com and request information or walk into a corporate office at WZ-92A, Raja Garden, and New Delhi-110015to get information and business details about the project. Step 7: Study the FDD Floor space required: 1200-1500sq ft Area Exclusivity: Yes. Performance Guarantees: Yes. Payback Period: Less than a Year. Franchise duration: 5 years. Return on Investment: more than 100% expected).

Step 8: Call existing franchisees /Angel Investors

Unable to do this, no response from Agency outlets. But the Investor and franchisee response to this franchise on entrepreneur.com has been outstanding. Contact for speed car wash existing agencies available at (1) us.php http://www.speedcarwash.com/locate-

Step 9: Discuss Final Terms with Franchisor Speed carwash parent agency would send a contact person anywhere in Delhi to discuss terms. Info attained from agency contact person at +91-9814700087. Personal contact and confirmation unachievable for a basic study.

Step 10: Make a Buying Decision:

Need to undertake a primary and secondary data survey to have confidence in decision.

BIBLIOGRAPHY 1. http://smallb.in/franchise-opportunities-india -Indian franchise opportunities 2. http://www.franchisedirect.com/information/guidetobuyingafranchise/franchisefundingandthebusi nessplan/29/199/ -franchise applications. 3. http://www.investmentnetwork.in/ -investor connect. 4. http://www.entrepreneur.com/article/198310# -franchise funding 5. http://www.entrepreneur.com/article/198992 - franchise setup steps.

SPEED CARWASH 1. www.speedcarwash.com/franchise-presentation.pdf 2. http://www.franchiseindia.net/business-opportunities/Car-Wash-and-Maintenance/FranchiseSpeed/ 3. http://www.franchiseindia.com/interviews/Emerging/Clean-sweep-for-biz-profits575/#.UpHzVsRplmA 4. http://www.entrepreneurindia.com/article/starting-a-business/business-opportunity/A-peekinto-the-Car-washing-business-413/