Franchise (chain) is, I'm afraid, the most popular word in the business world today. Franchise business is also carried out by companies in all corners of the industry. Franchise (chain) to replicable success model is favored by many entrepreneurs, but the franchisee must join the strict examination of the enterprise, beware of joining traps. Trap one: high franchise fee for security At present, in China, people recognized some good chain of business projects (not necessarily the implementation of franchising, but in the business model has the same) such as McDonald's, KFC, Starbucks and most of the foreign countries from the amount of investment in the project, such as a McDonald's store investment of about 8 million yuan. Indeed, a mature franchise program due to its high brand value, the establishment of a sound franchise system requires a larger investment, so the franchise fee and royalties charged are higher, the overall investment is also higher, and the corresponding revenue is also more secure. From this point of view, it seems that the larger investment in the franchise program credibility is higher. In fact, the size of the investment depends mainly on the cost and scale of the business program. A large investment program does not mean that there is a good profit model and a perfect franchise system. For example, according to an industry insider, recently being recruited by the popular so-and-so coffee total investment of more than a million dollars, the franchise fee of hundreds of thousands of dollars, but the lack of careful assessment of the franchise site, as long as there are stores to let the franchisee to set up store, there is the suspicion of crazy expansion of money. There is such a phenomenon exists and China's current lack of appropriate franchise laws and regulations, so the franchisee should be more cautious, not only from the surface phenomenon to judge. Trap 2: more franchises From a certain point of view, the chain of franchises with a large number of relatively more mature projects, but this is not absolute. It is also possible that the project in the development to a certain extent, the alliance lacks the performance of the regional protection of the franchisee. First of all, we must look at the regional distribution of these franchises, combined with the profitability of existing franchises and the alliance owner's future development plans, to determine whether the number of franchises per unit of space is too much. If the number of franchises in the unit space is too many, many franchises gradually decline in profitability, it shows that the owner of the franchise lack of reasonable planning, so the owner of the alliance and franchise system is not trustworthy. Such cases are actually quite a lot, recently a film printing chain has been accused of excessive chain problem, a 500-meter street can actually open at the same time three of the same store. And a pure water chain is because of excessive franchise problems are constantly being franchisee lawsuits. But there are also many companies in the regional protection to do very well, such as Garou home to franchise the regional distribution of reasonable planning, a set of norms to join the system, to ensure that the interests of regional franchisees. Trap three: free of charge franchise fee At present, many domestic franchise projects do not charge a franchise fee or royalties or management fees, which in the end is good or bad? Generally speaking, do not charge a franchise fee or royalties or management fees is a not so good sign, it is likely that the ally will require the franchisee to buy a large number of products or instruments and equipment, is a disguised pyramid scheme. Or, the ally is equivalent to a wholesaler, just sells goods to the franchisee, for the franchisee's day-to-day operation and management of little or no help. Certain such programs, the franchisee through their own efforts can also be profitable, but this is no longer part of the scope of franchising, because it does not have the basic elements of franchising at all. The alliance collects a certain amount of franchise fee, royalty or management fee from the franchisee is the alliance's entitlement through ceding its business model and establishing a management system, which is a must-have element of a mature franchise business model. You have to invest more experience in the field. It is best to squat in that brand's franchise for more than a month to observe its profitability in detail. At the same time to go to the market to compare the prevailing wholesale price of the product, if you find that the ally supply goods to the franchisee's price is higher than or equal to the market wholesale price, usually means that there is something fishy.