Precautions for joining a chain operation

Joining a chain operation is not as easy as people think. Practice shows that you should pay special attention to the following matters if you want to join a chain operation successfully.

item 1: choose the right industry to join

in recent years, there are not a few new popular chain brands, but many brands disappeared after a short time. It can be said that the brands of franchise chains have to be reshuffled almost every year, which undoubtedly increases the difficulty of choosing franchise chain entrepreneurs. Therefore, when choosing to join the industry, we must stand the test of the market: the chain operation system has been at least 5 years.

Item 2: The higher the joining requirement, the greater the chance of success

Joining a chain operation saves the trouble of not finding an entrepreneurial project for those who want to start a business, and it is indeed a shortcut to success. According to a survey, 81% of independent shopkeepers in Japanese retail industry closed down in the first year, and only 8% can last until the fifth year; However, only 21% of chain stores closed their business in the first year, and 77% of chain stores can survive to the fifth year. This survey proves that "joining must be more cost-effective than starting their own business." But these data do not mean that you will be 111% successful after joining.

according to the survey, it is more secure to find a competitive chain brand with a certain experience in opening stores and a certain number of chain stores or at least five years of development. Some emerging franchise systems have not been developed in the market for a long time, have not experienced the market, and their customers' consumption habits have not yet been developed, which is easy to cause the illusion of temporary business prosperity. When choosing a weak chain brand, although you can pay less for joining, you can enjoy less resources and help from the headquarters. Many things have to be taken care of by franchisees themselves, and their competitiveness is naturally weak.

Competitive chain brands naturally have high requirements for joining because of their good development prospects. However, it should be understood that brands with stricter joining conditions often have a more complete joining system and stronger financial resources and strength, but they are more capable of ensuring the profits of franchisees. Because of this, the more reputable chain enterprises are, the more rigorous they are when selecting franchisees.

Item 3: It is best to "face to face" with the chain headquarters

There are many chain enterprises now, and the profits of franchise stores in previous years are considerable, which makes some emerging chain enterprises and franchisees more impetuous. Some entrepreneurs are eager to start a business, and only listen to some promotional materials of chain enterprises and hastily sign up to join. When there is a dispute, they find that the chain headquarters is smaller than their own stores, or even an empty shell, and they have no ability and experience to solve the problem of stores. Therefore, it is very necessary to go to the headquarters and its franchise stores in person to collect first-hand on-site information.

In addition: Ten Points for Attention in Signing a Contract

In recent years, with the increasingly popular entrepreneurial trend, more and more people have joined franchise chain stores, and the disputes about joining have also increased. These disputes are due to the franchise contract. Before joining, the franchise headquarters did not explain the contract content to the franchisees in detail, and the franchisees often signed the contract without in-depth understanding. Under the vague treatment of both parties, it is not surprising that disputes will arise.

In fact, franchisees should thoroughly understand the contents of the contract before signing the franchise contract to ensure their own rights and interests. Don't think that the franchise contracts are all templates of the headquarters system and cannot be modified. In fact, the contract should be made through mutual agreement. In other words, franchisees should not only open their eyes to see the content clearly, but also have the right to ask for modification of the content. This paper only provides the following ten points for attention for franchisees as a reference when signing a contract.

firstly, the head office should show the service badge registration certificate upon request. Because the so-called franchise means that the headquarters authorizes the brand to the franchise stores. In other words, the headquarters must own the brand before it can be authorized to the franchise stores. In other words, the headquarters must first obtain the service label registration certificate issued by the Central Bureau of Standards. A while ago, there was a dispute over a Chinese restaurant chain system. The old and new systems entered the Fair Trade Commission. Later, the losing party was forced to change the brand name, and even the franchisees who had joined the system were forced to change their names. How innocent! Therefore, before joining, franchisees must first confirm that the headquarters does own this brand before they can join with confidence.

second, the payment method of royalties. Generally speaking, the headquarters will charge franchisees three kinds of fees, namely, joining fee, royalty fee and deposit. The so-called franchise fee refers to the fees charged by the headquarters for helping franchisees to make overall store opening planning and education and training before opening a store. The royalty refers to the fees that franchisees need to pay for using the trademark of the headquarters and enjoying the goodwill. This is a continuous charge. As long as franchisees continue to use the trademark of the headquarters, they must pay regularly. The payment period may be once a year, quarterly or monthly. As for the deposit, it is the fee charged by the headquarters to ensure that the franchisees will actually perform the contract and pay the payment on time. Among them, due to the continuous charging of royalties, some franchise headquarters will require franchisees to write a check for the full amount of royalties within the contract period at the time of signing the contract. For example, if the contract period is five years and the royalties are paid annually, some headquarters will require franchisees to pay the royalties for five years in five checks at a time. Later, there was such a case. A franchisee of a certain system opened a shop for two years and closed down because of poor business, but as early as the signing of the contract, a check for the five-year royalty was paid to the headquarters. It stands to reason that in the next three years, since the store has stopped using the trademark and goodwill of the head office, there is no need to pay royalties. However, the head office still rolls the checks it has received into the bank for withdrawal, which has caused the franchisee not only to lose business for two years, but also to pay the amount of these cheques that have been drawn! Therefore, franchisees must remember to add a note to the contract when they meet the requirements of the head office to open all the check denominations of royalties within the contract period at one time. When franchisees close stores and no longer open stores, the head office must return the unexpired royalties to protect their own rights and interests.

thirdly, the price of supply from the headquarters. In the general franchise contract, the headquarters will require franchisees to purchase goods from the headquarters, and may not purchase goods privately. This is often the most controversial part between headquarters and franchise stores. Because franchisees often think that the supply price of the headquarters is high, they have purchased from abroad on their own. However, based on the consistency of the quality of the chain system, the headquarters had to ask the franchise stores to purchase from the headquarters in a unified way, so the dispute arose. A more reasonable way is for franchisees to ask in advance that the price supplied by the headquarters should not be higher than the market, or that it is acceptable to be higher than the market, so as to avoid disputes between the two sides over the price afterwards.

fourth, the protection of business circle. Usually, in order to ensure the operating interests of franchise stores, franchise headquarters will have a business circle guarantee, that is, no second branch will be opened within a business circle. Therefore, franchisees must be very clear about the scope of the business circle. However, the common situation is that the headquarters is not far away from the business circle, and when a second store is opened, it will affect the business of the original franchise stores and cause protests. In fact, if the headquarters is located outside the security business circle, the franchise stores have no right to protest. However, it is worth mentioning that when some chain stores increase or reach saturation, it is difficult to open new stores under the protection of the business circle, so they develop the second brand by chance. It means to use another new brand name, and the business content is exactly the same as the original brand, so that you don't have to be limited by the business circle protection restrictions of the original brand. For example, there was a house intermediary chain system that was like this, and in the end, of course, it would lead to a group of resistance from franchise stores. Therefore, in order to protect their own rights and interests, franchisees should clearly state that the headquarters should not develop a second brand with the same business content when signing the contract.

fifth, the terms of non-competition. The so-called prohibition of non-competition means that in order to protect business technology and intellectual property, the headquarters requires franchisees not to engage in the same industry as the original franchisees during the duration of the contract or within a certain period after the end. This regulation is designed to protect the intellectual property rights of the headquarters, and there is nothing wrong with it. The Fair Trade Commission also believes that this will not violate the law. But how long should the period of non-competition be reasonable? If it is too long, it may affect the future work rights of franchisees. In this regard, there was a chain system in which the non-competition clause was stipulated as three years, and the franchised store sued the Fair Trade Commission. The Fair will consider the non-competition clause reasonable, but think that three years is too long? Later, the headquarters also wisely changed three years to one year. Therefore, franchisees must consider carefully when signing the contract, so as not to affect their future livelihood.

sixth, the issue of management regulations. Generally, there are as few as ten or twenty articles in the franchise contract, and as many as seven or eighty articles and hundreds of articles. However, there is usually a provision that "matters not covered in this contract shall be handled in accordance with the management regulations of the headquarters. If franchisees encounter such a situation, it is best to ask the headquarters to attach the management regulations to the contract and become an annex to the contract. Because the management rules are formulated by the headquarters, the headquarters can incorporate all the matters not specified in the contract into its management rules, modify them at any time, and do whatever they want, and then the franchisees will have to be at the mercy of the headquarters.

seventh, the penalty for breach of contract. Since the franchise contract is drawn up by the headquarters, it will be more beneficial to the headquarters. In terms of penalties for breach of contract, usually only the part aimed at franchisees is listed, but the part of breach of contract by the headquarters is not mentioned at all. Franchisees should be able to put forward relative requirements, specify the penalty provisions when the headquarters breaches the contract, especially the service items and logistics support that the headquarters should provide, and ask the headquarters to actually achieve them.

eighth, the handling of disputes. Generally, the court of jurisdiction will be clearly listed in the franchise contract, and usually the local court where the headquarters is located is the court of jurisdiction. In order to make it more convenient for headquarters personnel to travel to and from nearby courts in case of need in the future. It is worth mentioning that a franchise headquarters once stipulated in the contract that franchisees need to go through the mediation Committee of the headquarters before they want to file a lawsuit with the court. In this case, who are the members of the mediation committee? If it's all from the headquarters, then the result of mediation will of course be biased towards the headquarters and not conducive to the franchisees. Due to the contract, the franchisee can't ignore the mediation Committee and go to court directly. Therefore, the author suggests that franchisees should ask for deletion when they encounter similar terms.

ninth, the handling of contract termination. When the contract is terminated, the most important thing for the franchisee is to get back the deposit. At this time, the headquarters will check whether the franchisee has violated the contract or owed money. At the same time, the headquarters may require the franchisee to remove the signboard by himself. If everything goes well and there is no owed money, the headquarters will refund the deposit. However, in the event of a dispute, whether or not to remove the signboard often becomes the focus of wrestling between the two sides. Some headquarters even hire their own employees to dismantle signboards. In this case, franchisees need to depend on who originally funded the signboards. If it is funded by the franchisee, then the ownership of the signboard "property" should belong to the franchisee. Although the headquarters owns the trademark ownership, it cannot be dismantled without authorization. If you really want to dismantle it, you must enforce it through the court. If the headquarters dismantles itself, it is a crime of damage.

tenth, this is the last thing to pay attention to, that is, after the contract is signed, both parties must hold one copy each. Once, after a supermarket chain signed a contract with a franchisee, the headquarters left two contracts and did not leave one for the franchisee. Later, it was sued by the Fair Trade Commission to correct it. Therefore, franchisees must remember to keep one copy, so as to clearly understand the contract content and ensure their own rights and interests.

of course, the most important thing is to read the contents of the contract carefully before signing it, and understand the contents one by one. If there is anything unclear or unclear, you should ask the head office staff clearly. Because only by carefully understanding the contract before signing the contract can we reduce future disputes.

finally, I wish you success!