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Building on the tried and tested: How to identify whether a franchise system is successful

The franchising concept promises the newly founded franchisee a strong start into the market and good growth opportunities. By adapting the mechanisms, strategies and product selection of the franchisor, one can effectively save on own capacities, in addition to the newly established franchise enterprise profits from the already existing popularity level of the franchise network. But not every franchisor who offers licensing offers is automatically the ideal partner for a rapid business success. Read in this Engel & Völkers article why you should consider its success when choosing a franchisor and how you can make an informed assessment.

Franchisors are not all the same: Pay attention to risk factors

In principle, any company intending to expand may set up a franchise system to grant franchisee partner licenses. But this fact alone makes the system by far not yet worthy of cooperation. Depending on the situation and intent of the franchisor, a partnership in question can result in immense financial damage to you as a franchisee. For example, if the franchisor is in an economically precarious situation or is close to bankruptcy, the future of any franchisee operation would result in bankruptcy filing. But even beyond such extreme examples, it is important to closely monitor the economic success of a franchise system in which you intend to invest. After all, your franchise business should benefit from the partnership and enrich your business, rather than hampering its progress. The understanding of the franchisor's success may vary, but it is important that you identify a potential that will benefit you and your franchise investment.

Growth as a success indicator of a franchise system is more important than its size

To see which franchisor is the right one for your business investment, first take look at the expansion activities of the franchise system. If the franchise system you are interested in has a strong period of growth, especially in the recent past, or if it announces itself via clues such as public announcements, increased partner recruitment, or meaningful company data, this is at least a sign of the franchisor's temporary success. His supply is so much in demand that he wants to open up further geographic markets - here is where you have a good chance, as a franchisee to become part of this growth policy and in this case also the high sales.The size of the franchising network is secondary. Thus, a new, innovative franchise concept with few partners can turn out to be so successful that its market share will multiply in a boom-and-tumble manner within a few years. However, predicting the long-term nature of such a trend is difficult. For this reason, in the case of a small franchisor, it is advisable to negotiate a senior position within the entire system, such as a shareholder, to offset the higher risk of your investment.

For large, established franchisors, on the other hand, growth tends to be more controlled and smaller, but the risk to franchisees is lower due to their existing reputation and proven marketing and offer strategy. In addition, large licensing partners offer the advantage that they have experienced and survived both highs and lows as a result of their long existence, which further underlines the security of a partnership. For example, awarding master licenses to such a large franchisor may prove to be a great opportunity for you, as a franchisee, to effectively shape a significant phase of expansion. After all, it is a question of your character and your management style, whether you choose a small or large franchisor. However, the success of the system in question should always be taken into account in order to get the maximum benefit for your investment.

Globally successful real estate franchise with Engel & Völkers

Present at over 800 locations worldwide, the Engel & Völkers real estate franchise includes a network of more than 10,000 employees. Our business model, which combines the marketing of exclusive real estate with over 40 years of industry experience and a full service philosophy, is internationally well received today and has generated total sales of 667.8 million euros in 2017 alone. At the same time, the success story of the Engel & Völkers real estate franchise has just begun: for our free license areas, we are looking for you as a dedicated license partner.

Check out our our overview page to find out which privileges you can expect as a franchisee of Engel & Völkers, what qualifications are needed, and which attractive locations you can acquire the rights to within our real estate franchise. In addition, we are happy to help you by e-mail or telephone!


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