Beware Of The "Beauty Trap" Of Franchising

Franchising is now becoming an increasingly fashionable word. Looking at it, beauty shops, laundries, printing shops, headwear shops, clothing stores and optical shops are all shops that are familiar with signboards.

Open the computer, "80 thousand yuan back to the" "let yourself be the boss", "invites to join" advertising is overwhelming.

However, in recent years, frequent franchising disputes have led people to think twice.

Franchising means that the franchisor grants the franchisee the form of a franchise contract in the form of a franchise contract, including the trademark (including service mark), trade name, product, patent and proprietary technology, business mode, etc., and the franchisee conducts business activities under the unified business model of the franchiser according to the contract, and delivers corresponding fees to the franchiser.

Franchising, as an important marketing method and one of the main forms of chain operation, is now becoming an important means for domestic enterprises to achieve low cost and high speed expansion.

However, in the investment promotion activities of franchising companies, many companies use false advertising campaigns (such as high yield and high return) to recruit franchisees, and defraud franchisees. Some even engage in pyramid selling activities prohibited by the state under the name of franchising. Some consulting agencies also intend to excessively promote franchising and seek profits from them.

Reporters learned in the interview that these blind development franchisees, known as the "join trap" enterprises are mostly small businesses, most of them are not strong enough, and their business conditions are not good. The purpose of developing franchisees is to expand the market rapidly by using the funds of franchisees.

According to the statistics of China Chain Store Association, as of the end of 2002, there were more than 3000 franchising projects and more than 20 thousand operation points nationwide.

Generally speaking, the franchise headquarters is usually small and not strong enough.

Many franchisees' corporate culture, management team, financial strength and management foundation are still relatively weak. Some franchisees are blind to expand, resulting in the loss of control of the number of chain stores to a certain scale, causing serious losses to the headquarters.

Some enterprises take part in the Franchise Exhibition held in May in the first year, and there is a problem in the past second years.

Some experts pointed out that ineffective control is related to the overall quality of the franchisee, the level of social credibility development, and the legal environment, which stems from the insufficient management ability of the enterprise itself.

At present, the investment promotion activities of franchising around the country are still in full swing. How can small investors protect their rights and interests?

According to the "business franchise management measures" promulgated by our Ministry of trade in 1997, the companies that engage in franchise business must have registered trademarks, trade names, products, proprietary products and unique imparable management techniques and know-how, and have a good business performance for more than a year.

Experts remind Entrepreneurs: don't be bewildered by tempting franchise conditions. You should know more about the strength of the franchisee and the quality of related products, the quality of personnel, and the investment return cycle.