The specifics of a small business franchise in manufacturing
You can open your own business in the field of production through a franchise. Manufacturing franchises are barely 10% of the total. This is due to the amount of investment at the initial stage, and to the labor input of such a business in comparison with the classic catering or the “buy and sell” category. But the incomes here can be such that franchisees who have gone into other spheres never dreamed of.
If you have an amount of 1 million rubles (minimum) and you are determined to launch a manufacturing business, then a small production franchise may come in handy.
Buy a manufacturing franchise - what does it mean
In this case, the franchisee buys not just a business model, but also:
- Production technology,
- The right to engage in the production and sale of goods,
- Documents for manufactured products,
- Special equipment (or contacts of suppliers who will sell everything you need at a discount),
- Workshop design,
- Raw materials for production, exclusive ingredients or their recipe (not always),
- Scheme of sales and sales of products.
The production franchise agreement should specify the time spent on mastering production, training specialists, launching a production line and assistance at each of these stages.
Small Business Manufacturing Franchise Features
The reason why the share of manufacturing franchises is small is the reluctance of large companies to share their best practices and technological know-how. On the other hand, not every businessman wants to get involved in such an area, since he will have to look for qualified workers, invest in the launch of production, run a difficult business, which can be difficult without experience.
But the franchise business has its advantages in production. With a low cost of production, it is possible to produce it in such volumes that will quickly bring the business to a good level, especially if the product is already in demand, the brand is recognizable, there are few competitors in the market.
And yet, do not forget that the specifics of the franchise business are applicable in this area. So, the conditions clearly state how much of the product can be produced, on what equipment, using what raw materials or ingredients. Strict requirements are placed on production times and sales plans, as well as product quality. Violation of the conditions entails the possibility of unilateral termination of the contract on the initiative of the franchisor.
The franchisee is also required to provide complete and timely reporting of both production and trade (profit, sales volumes, sales areas, etc.).
There is no production franchise without a lump-sum fee and royalties. The first goes not only to pay for the right to use the trademark and trade secrets, but also to purchase equipment, ingredients, etc. For the franchisor, the franchise is also beneficial because the franchisee undertakes to purchase ingredients or raw materials from him.
Franchise from the manufacturer in the Russian market
Buying a franchise from a well-known company is a sure guarantee of a successful start.
However, about six years ago, this business was not so in demand, and the demand for it was insignificant. The most stable and reliable of all franchises is the small business manufacturing franchise.
Why is this way of doing business so popular? Let's take a closer look. And first, let's define what is a franchise (franchising)?
What is a franchise?
In addition to his brand, the seller gives his ideas and suggestions for doing business, which is a help for a budding entrepreneur.
A franchisor is a company that offers a business for sale, and a franchisee is a client who has bought the rights to conduct business under this brand from a management company.
The main benefits of purchasing a franchise are as follows:
- In addition to a popular brand, you acquire a completely ready-made business that has a reliable and well-developed plan of doing business, a streamlined system for purchasing materials and responsible suppliers. Consultants will advise you on how to avoid difficulties and mistakes in your work. After all, they have all been studied for a long time. And to correct them, methods and recommendations have been developed that will allow you to receive a stable income from the very first step.
- No additional spending on advertising your products. The main condition for franchising is work according to the standards that are in force in the company network.
- To make your business as successful as possible, the management company constantly conducts seminars, trainings and trainings.
How to open a Pyaterochka store by franchise, read here.
An inexpensive manufacturing franchise for small businesses provides a profit from a small start-up investment. In the absence of a significant amount of free capital, acquiring a franchise creates a good chance for a startup. A novice entrepreneur in the field of production is immediately involved in an established business system. Its chances of commercial success are greatly increased compared to those trying to start a business from scratch.
Commercial entity of the franchise
A franchise is a legal agreement whereby one company gives another the right to use a brand or business model for a specified period. The contract involves two parties.
The giving party is called the franchisor. It is a state-of-the-art or well-known brand that, under the terms of the contract, grants the receiving party the right to use the business process or trademark. The second, receiving party is called a franchisee.
For example, a well-known company offers a franchise for the production of auto chemicals. She is interested in the subsequent sale of goods under her brand. There is no free investment, but production expansion is required. Then they use the happy opportunity to make money on a brand or a successful business model. You just need to find a good performer. His role is often claimed by representatives of small businesses who want to start producing auto chemical goods.
An agreement is concluded between the two parties, which defines the main legal aspects of mutually beneficial cooperation. A large company, in addition to a well-known name, shares experience and offers support to a young company. The latter undertakes obligations to promote a well-known brand and maximize the promotion of the franchisor's trademark. The agreement provides for financial nuances that are beneficial to both parties.
Small Business Franchise Benefits and Risks
Manufacturing franchises are less popular than other types of deals. This is explained by the fact that doing business is accompanied by additional difficulties. For example, you need to think about the observance of safety at work. But on the other hand, the consequence of such unpopularity is the absence of high competition. This provides additional opportunities for small businesses.
Each of the parties to a manufacturing franchise has certain benefits and perceived risks. Benefits for beginners might include:
- the franchise provides tangible savings on product promotion;
- you can count on the help of the franchisor to learn how to work with a successful business strategy;
- increased starting reliability of the production project;
- the franchisor eliminates the hassle of forming a product range;
- advertising, merchandising, marketing costs become minimal.
- decrease in independence in decision-making and increase dependence on the obligations of the agreement;
- strict obedience to all kinds of restrictions under the terms of the agreement;
- removal from control on the distribution of funds;
- a sufficiently large initial contribution.
Contrary to popular belief, a manufacturing franchise is no less profitable than a service franchise. It is often much cheaper to pay royalties than to develop your own brand, and the acquisition of a franchise actually frees an entrepreneur from the need to invest in advertising and work on brand awareness of the products.
In this article, we have collected for you the best manufacturing franchises in Russia for small businesses.
The Industrial Floors company specializes in the installation of polymer and concrete floors in industrial and other industrial buildings. The network's entrance fee is 220 thousand rubles, the total amount of investments (funds for the purchase of equipment, materials, etc.) is about 400 thousand, and the company's royalties are seven thousand rubles a month. It is advisable that the franchisee has experience in the construction business.
The payback period of the enterprise is from one to three months. The franchisor offers partners everything necessary for work: equipment and materials on special terms, marketing promotion, attracting customers.
Noxton Tech is engaged in the manufacture of various luminous materials for advertising, construction, interior decoration, car tuning, nail art and other areas. The company has no entrance fee or royalties, and the total investment in opening its own business is only 190 thousand rubles.
By becoming a partner, the franchisee receives exclusive rights to work in the region, minimum prices for materials, all necessary safety certificates and other documentation, website and advertising materials.
According to the franchisor, due to the high (up to 80 percent) profitability, the payback period of the enterprise is only two to three months.
The Omeletik from a sachet company invites everyone to make ready-made breakfasts (ready-made omelet in vacuum packing). The lump-sum contribution of this franchise ranges from 200 thousand to one million rubles. depending on the region, while the total amount of start-up investments of the business is estimated by the franchisor at one and a half million rubles.
Royalty in the network is 2 percent of the turnover (on average, about 300 thousand rubles per month) and is paid monthly for three years. The payback period of the enterprise is about one and a half years.
Today, to start a business and work under a well-known brand, it is enough to buy a franchise. In fact, a franchise for small businesses is the right to use an already promoted trademark and successful technologies for doing business. If you open a company with an unknown name, it will take a lot of effort, time and money to position it in the market. A franchise makes it possible to launch a business under an already popular brand, whose products or services are obviously in demand. Agree that this option looks more attractive.
What is important to know when choosing a profitable small business franchise
When purchasing the right to use a trademark and business technologies, you can get information about the estimated payback period in advance.
Popular Small Business Franchises
We have prepared a special list, which includes inexpensive, fast and good franchises for small businesses in Moscow and the regions of Russia. Perhaps there is an option on this list that is ideal for you to successfully start your business.
Mobile application "My City"
For firms and enterprises, getting into this directory is paid. In addition, a variety of advertising options are provided.
My City is part of the directory of low-cost small business franchises. How profitable the investment will be depends on the specific locality. It should also be borne in mind that in the absence of royalties, monthly payments will still have to be made. Their size is 9,000 rubles. The money is spent on maintaining the application and updating its functionality.
Mobile operator "Beeline"
The franchise network already has about three and a half thousand such objects in Russia. The obvious benefit is that there is no flat fee or royalty. Having an amount of more than a million rubles and a desire to open a cell phone store, you can count on the comprehensive help and support of Beeline.