Franchise Systems As a small business we compete with franchise companies on a daily basis. There a great benefits to the franchise system in procedure/policy manuals to a organised system. Any small business can also have these systems and policies in place as BBCS has done. More times than not we compete on price. Though price is not always the best guide, our company we provide a competitive price, we feel we are neither expensive or cheap. Recently BBCS has lost a contract to a franchise company who offered more than half our contract price. So I thought Id share some knowledge of the franchise system that Ive learnt along the way. Franchise companies draw their income from selling contracts, and receiving on going royalties from a franchisee. A new franchisee would possibly spend $20/30k for a guarantee of approx. $100k. The stipulations of this guarantee usually involves the franchisor offering contracts over a set time period to the franchisee to the gross value of $100k. If the franchisee deems the contract not suitable he/she has the right to reject that contract. Usually if the franchisee rejects the offer of contracts more than three times the franchisor has met his contractual requirement and doesnt need to offer any more work to the franchisee. This all sounds like a great system, though; The Franchise company quotes and obtains the contracts, they set the price. If a franchise company has a large number of franchisees to fill work for or wishes to raise its market share in the area, they will quote unrealistic prices to gain the contract. Remembering the franchisee only has three times he/she is allowed to reject work offers. If the franchisee takes the work on they are faced with cutting corners, or simply working the contract below their award. As the franchisee is not only faced with a contract that is grossly undervalued they need to pay a monthly royalty on the gross value of the contract, and more than likely need to pay advertising and stationary fees. If a client receives three quotes, two very similar and one more than half the price, I believe that client should be held accountable. They are just as much as a cog in this system as the company providing quotes below award. This is not a attack on the franchise system but on companies that provide unrealistic prices and clients that accept those prices. BBCS have always remained firm in its pricing structure, and in result have built up very valued clients who are satisfied in the service they receive. Support small local business, they are the mums and dads of this world.
Posted on: Wed, 26 Nov 2014 01:47:55 +0000
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