Introduction:

Small Business franchises is the rights conferred to the individuals called franchisees to market a product or provide a service, often exclusive for a specified area, as granted by the Small business entrepreneur or manufacturer. The business entrepreneur or company granting franchises is called a franchiser. It is nowadays, convenient way of doing & expanding the business without making extra investment by the entrepreneur.

Areas:

The areas in small businesses where franchises rights granted are:

1) Electronics Goods Business such as TVs, Radio ,CD/DVD players etc.

2) Home made food products such as Jams, Jelly, Breads, Sauce etc,

3) IT, Management educations services,

4) Stoles, Blankets, Carpets etc. manufactured by the small Cooperative firms and Weavers,

5) Utensils, Clocks, locks etc. manufactured by the local manufacturers etc,

6) Electrical goods business etc.

Advantates of Franchising a Business:

Franchising the business provides both the individual franchisees as well as the small business owners numerous advantages. The benefits which the franchisee gets are:

1)Association with the well equipped organization

2)Administrative supports from the parent company in running the business &

3)High sales and greater profits earnings due to the easy acceptability of the goods & services among the consumers under the brand name of the parent organization

The advantages to the small business franchiser are:

1.Lower Capital Expenditure Requirements

2.Higher Return on Investment

3.Risk Reduction

4.Greater Speed of Growth

5.Reduced Role in Day-to-Day Operations

6.Highly Motivated Management and Lower Turnover Rates

7.Better Quality Control

8.Maximized Unit Performance

9.Lean Structure

10.Effective Brand Building and Advertising

11.Easier International Expansion

Types:

There are three basic types of franchises in this field:

1.Distributorships, which grant the right to sell their parent company's product(s) such as auto dealerships (Toyota, Suzuki, Hero Honda, Bajaj Auto etc).

2.Trademark or brand name licensing, which gives the licensees the right to use the parent company's trademark or brand in conjunction with the operation of their own business i.e., beverages (Coca Cola , Pepsi) , FMCG ( Agmarks,Sambhar), Electronics(Phillips, Sony) etc.

3. Business format franchisors offer to their franchisees the license or right to sell its goods or services and/or use its business techniques. The franchisees usually pay an initial fee to acquire this right, and thereafter pay a percentage of their gross sales to the franchisor throughout the term of their franchise contract.In return for these payments, franchisees gain privileges, including the right to sell a proven and recognized product or service, to use the franchisers business practices, and to receive initial training and ongoing support. Additional responsibilities can and usually do include:

1.Requirements to meet a variety of quality controls for products and services sold.

2.Restrictions on what they can sell or how they can operate using the company's name.

3.Specifications for their business location and site appearance.

4.Prohibitions on the operation of any similar businesses during or after the term of the franchise agreement.

Franchisees usually have an advantage over their nonfranchisee competitors, since they have the rights to use the franchisers:

1.Brand names, trademarks, copyrights, trade secrets, and patents.

2.Uniform logos, storefronts, and interiors.

By following the franchisers business practices and offering products that meet the company's standards, franchisees can consistently provide customers with quality goods and services

Franchising opportunities provide brand recognition, management and administrative systems and a proven business model to small business owners. In theory, this should result in franchises having higher success rates than non-franchise business opportunities. But in practice, franchises can and do fail.

Causes for Failure of Franchises of Business

Franchises primarily fail for the following reasons:

1)Franchisee failing to collect necessary feedbacks about the franchiser

2)Unfamiliar with the particular franchise opportunity

3)Franchise system itself &

4)Franchisee not in the unsuitable franchise business.

Before considering to buy a franchise, a person should determine:

1.Annual income they require in order to provide a secure and comfortable living.

2.What financial resources which can safely be pumped into the business

3.How long he/she can go without fulfilling their their sales targets.

4.Whether feasible for him/her to purchase any other suitable franchise purchase

5.Determine their tolerance for taking financial risks

6.Thereafter begin researching and seeking out franchises. Match franchises to your financial capabilities and risk tolerance.

7.Check your credit report and clean-it-up if necessary.

8.Request information about franchises online or at trade shows.

If a person interested in this field does not get satisfactory answers of the above points, s/he should abandon his plan to buy that franchise business. There is also absolutely no guarantee that the franchisers business will do well after the purchase of the franchising rights of such business by the individual.

Many Franchisers sell area or master franchises within a certain specified territory. These are of course costly. If a person own a single franchise and are successful, then if there is an opportunity to develop in another and the territory is available, then the franchiser will usually be pleased to sell him another franchise for the new location. If a person own a fast food franchise (ex. Baby Milk Powder) , s/he may be restricted in purchasing from another franchisor another Baby Milk Powder franchise. S/he may be allowed to purchase a different franchise such as a Soap Franchise. A franchisee may have a financial partner who may assist him/her in his/her business operations.

Conclusion:

There is no doubt, that, the franchises businesses are growing very fast both in terms of the profits earnings and the areas covered. In India, the small business franchises has grown up enormously during the past two decades. In a developing countries, where unemployment problem is vigorous & big metros are overcrowded and overburdened, youths are being

attracted to the franchises business and getting franchises rights of the small business

is less expensive. Also the persons can carry out their franchises business in the areas of their

choices and also gets the administrative and technical supports from the parent organization. However, franchise business is also a business, which is influenced by the market forces e.g.,cyclical fluctuations. A person of course, be careful in selecting the franchises business, which fits best according to his/her interest, capability, financial resources and present market environments.