We make franchising the most organic and optimal franchise funding source in India. But how? What do you mean by Franchise Funding Sources? Is there a process to be followed in funding a franchise? Too many questions but yet the answer remains as simple as possible.
Sparkleminds Role in Franchise Funding Sources
The majority of the clients who invested the amount for franchising their business with us; was recouped from the initial sale of franchises in a year. Franchise funding sources are an incredible way of expanding your business.
A franchisor who hopes to reach a mature and successful stage of development must structure the initial franchise fee and royalty to facilitate. Instead of hindering the entry of qualified franchisees.
Your continuing fees should permit the franchisee to price competitively, maintain quality and make a reasonable profit on his investment. Some franchisors desire an initial high profit; thus, they make onerous charges that are incompatible with sound business practices.
The methods by which you obtain revenue from franchisees are the most crucial factor.
Licensors / Franchisors can charge royalties based on a percentage of gross revenue derived by a licensee/franchise. We construct elaborate mathematical models to compute a fair or optimum royalty.
Royalties are based on factors, such as:
- Net profits, gross sales, or net sales.
- Royalty minimums or maximums or floating based on averages.
Process of Franchise Funding
Eventually, franchisors are generating revenue from the sales done by the respective franchisees. A large influx of cash comes from mandating your franchisees to buy certain products to run their business.
This includes the ingredients for making products, equipment, promotional items, etc. When the franchise owners inevitably buy those things, you have a bigger franchise network with larger orders for vendors and suppliers.
These franchise funding options grant you the freedom to negotiate volume discounts with vendors and suppliers. A portion of this saving will give you higher operating margins and a competitive advantage over similar businesses.
Also, franchise locations may operate better and more profitably than “company-owned” units.
More About Franchise Funding
Franchise financing requires a large financial commitment. Nevertheless, new franchisees with less funding need not feel low by the hefty cost. Finding the perfect combination of resources to make the goal of franchise ownership a reality may be done with a little planning.
Franchising permits your company to grow with capital invested by individual franchise owners. You can simultaneously open multiple outlets in a short time. Thus, gaining a foothold over would-be competitors.
To Sum up,
Once again, this is because a highly motivated owner is running your business rather than an employee. With their capital at risk, franchisees are much more motivated than employees and perform at their highest levels of efficiency.
Call our team of experts to understand how to franchise funding works and get a clear picture of franchising in India.