What is the difference between a franchise company, a branch, and a subsidiary?

The company is part of the head office, not an independent accounting entity. It is a branch of the enterprise that operates business in other places; the subsidiary is an independent accounting entity with its own accounting records and corresponding accounting systems. .

The concept of franchising

1. The concept of franchising

Franchising (chain) is probably the most popular word in today's business world. Companies that carry out franchise business are also found in every corner of various industries. So, what is franchising? What are the benefits of franchising? Why is franchising successful? If you don't understand these issues, you won't be able to do a good job in franchise business.

1. International Franchise Association’s explanation of franchising

Franchising is a contractual relationship between the franchisor and the franchisee. According to the contract, the franchisor provides a unique business franchise to the franchisee and provides guidance and assistance in personnel training, organizational structure, business management, product procurement, etc. The franchisee pays the franchisor corresponding fees. Generally speaking, franchising is a business model for the franchisor to expand its business and sell goods and services.

2. Characteristics of franchising

(1) Franchising uses its own brand, proprietary technology, business management model, etc. to expand its business scale by combining it with other people’s capital. A business model. For the franchisor, franchising is the expansion of technology and brand value, the cloning of the business model rather than the expansion of capital.

(2) Franchising is a win-win business model. Franchising can only continue if the franchisor can achieve more efficient development than if he operated alone, and if the franchisee could obtain more benefits than if he operated alone.

(3) Franchise is an intelligent business organization form. Franchising enables franchisees to fully combine and utilize their own advantages and absorb a wide range of social resources to the greatest extent, while franchisees reduce entrepreneurial risks and costs such as time and capital.

In short, franchising is a new trend in store opening and entrepreneurship in the 21st century. It is a new driving force for future social and economic development. It will bring new entrepreneurial opportunities and profit prospects to many entrepreneurs.

2. The success rate of franchise operations

A Gallup survey from September to October 1997 showed that more than 90% of franchisees said that their franchises could be considered successful. Or very successful. Among them, 18% exceeded expectations, 48% met expectations to a large extent, and 24% basically met expectations. Two-thirds of those surveyed believe that if they had started the same industry alone, they would not have achieved such success. Almost 2/3 said they would buy or invest in the same franchise if given the opportunity again. Practical surveys have proven that the success rate of joining a business is 95.5%, while the success rate of starting a business alone is 4.5%.

3. Advantages of franchising

1. Since the brands, trademarks, and management techniques owned by the headquarters can be directly used, compared with starting your own business, you will save time and money in terms of time and money compared to starting your own business. It reduces a lot of financial and mental burdens. For people with no business experience at all, they can enter the industry in a relatively short period of time.

2. An excellent headquarters, in order to improve the goodwill of the entire chain enterprise, will always develop original and high value-added products to lead competitors with product differentiation. Franchise stores do not need to develop their own products. department.

3. Since the headquarters coordinates and handles promotions, purchases, and even accounting affairs, franchise stores can concentrate on sales without any distractions.

4. Since franchise stores have inherited the goodwill of the chain system, they give customers reassurance. They will feel familiar with newly opened stores or unfamiliar stores, and even new immigrants will join. Problems such as language barriers and living habits that shop owners worry about can all be protected under the same sign.

5. If you start your own business, there may be various difficulties in purchasing goods and raw materials. However, for franchise stores, due to the large-scale production and customization of the headquarters, even equipment, dining tables, chairs, miscellaneous equipment, etc. , can be purchased cheaply.

6. Pre-employment training and other work before the opening can be assisted by the headquarters. After the opening, there will be people to provide various guidance regularly.

7. If you start your own business, if competitors appear, you will have to fight alone to deal with it. Franchise stores have the backing of the headquarters to provide support;

8. If you start your own business, you must do it yourself. When deciding where to open a store, you often have no confidence in the quality of the location; for a franchise store, you can consult with the headquarters to evaluate site conditions, and even the head office can help with site selection.

9. Since the headquarters conducts market research on the surrounding environment at any time, including changes in customer structure and consumption tendencies, franchise stores can take corresponding measures as early as possible.

10. The success of the franchise store is the success of the headquarters, which also means helping the headquarters expand the market. Therefore, the headquarters also has a reward system and benefits for franchise stores with good performance