Franchise – how does it work? Can I get a loan?

Imagine two situations. The first one is about starting your business from scratch – it requires getting to know the market, breaking through the competition, meeting brand and finance challenges. The second one allows us to start a business under a popular name that is already recognizable and brings together potential customers. It sounds interesting? Well, this is the franchise opportunity, see more words below.

 

Franchise what is it?

Franchise what is it?

Simply put – a franchise is a contract signed between entrepreneurs. The first page is known and recognizable on the market (the so-called mother company, let’s call it company A), i.e. the franchisor, and the second is a new company wanting to enter the market – the franchisee hereinafter referred to as company B. Company A takes care of company B, transfers her knowledge, techniques, and often clients, also provides support. for this purpose a distinction is made between:

  • a production or industrial franchise consisting in the fact that company B, based on the technology provided to it by A, carries out the necessary production,
  • distribution franchise, which consists in the fact that B sells goods produced by A. Sales are carried out at the point marked with the logo and most often concerns grocery or clothing stores.
  • service franchise, where customers A are served by B. Company B may use company logo, trademarks and trademarks.

Importantly – company B does not get these rights for free. Most often, its services are associated with an initial (often high) fee and further, periodic fees related to e.g. generated profit.

 

What amounts are we talking about?

What amounts are we talking about?

The amount depends on the brand, its popularity and customers. The more popular the costs increase. The cheapest franchises are in the service industry, where at the beginning you need to put up about 10 thousand. zł. One of the more expensive franchises are popular fast food, such as KFC. Remember that invested funds usually do not pay back too quickly – it is estimated that return on investment is possible after only 2 years. When talking about costs, you should also remember about periodic payments (e.g. monthly or quarterly) for the franchisor, which are usually in the order of 3-6 percent. from our sales. The conditions, however, are determined individually and depend on many significant factors. Prices are rising especially in cities where the market is developing significantly. It is worth noting that competition contributes to lower prices, which in turn will be appreciated by the owners of company B.

 

Can I get a loan?

Can I get a loan?

Yes. If a young entrepreneur has no funds for self-financing, he can seek help from another source of financing. Of course, a bank loan will be perfect here, which can be used both for business development and for the very start.

Banks can allocate up to USD 350,000 for this purpose, which will certainly be appreciated by the owners of Company B, who aim for more expensive investments and brands. The loan period for this sum is 10 years. Among the competition there are also banks offering half a million zlotys and those giving “symbolic 10,000” to start a business. Companies with a 3-month market experience can get a non-repayable loan.

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