Success in business can be achieved in many ways. Although it cannot be considered easy, these methods can certainly lead to good results.
Besides building a business from scratch, many successful entrepreneurs have taken a different route. One such way is by running a franchised business. What is a franchised business and how does it work? Read on for an explanation.
Definition of Franchise Business or Waralaba
The word “franchise” comes from an archaic French dialect meaning “privilege” or “freedom.”
In Indonesian, the term is translated as “waralaba,” with “wara” meaning “more” and “laba” meaning “profit.” Loosely translated, a franchised business means “more profit.”
Generally, a franchised business can be defined as the right to sell a product, whether it be goods or services.
Meanwhile, according to the Indonesian Ministry of Trade Regulation (Permendag RI) Number 71 of 2019 on Franchise Operations, a franchise is defined as a specific right held by an individual or business entity over a business system.
Franchised businesses have the characteristic that they can be marketed and utilized by others in accordance with the franchise agreement.
The agreement referred to here is the agreement to purchase the right to sell goods or services from the business owner or franchisor.
In practice, the person who owns the business is known as the franchisor, while the buyer of the business license is called the franchisee.
In a franchise partnership, an agreement is made beforehand between the two parties, with the franchisor responsible for assisting in the use of the brand name, production process, operational system, production equipment standards, human resource management, and financial management.
Meanwhile, the franchisee is responsible for providing regular royalties.
Franchise Business Benefits
Similarly to other types of businesses, food franchises or drink and other product franchises offer various benefits for both parties, whether as the owner or buyer of the business rights. Here are some of the benefits of doing business through a franchise.
Business development is relatively fast
Investing in a franchise is a suitable option for entrepreneurs and anyone looking to become a business owner in Indonesia.
By choosing a franchise, the business owner does not need to worry about creating a business strategy as the planning and operational system have already been established by the franchisor.
This makes it easier for the franchisee to simply implement the established procedures and run the business.
This ease of operation is one of the key benefits of investing in a franchise. The likelihood of the business growing quickly is high without the need to spend time and effort on product development, increasing the value of the business.
All the franchisee needs to do is prepare a location and invest the necessary capital to run the agreed-upon franchise.
Another benefit of opening a franchise business is that you don’t need to worry about branding strategies, unlike if you were starting a business on your own.
Business owners usually have already done the branding, making the brand and products easily recognizable by the public.
With minimal promotion or branding needs, you can be more productive in sales. You just need to focus on running and expanding the business.
Have professional business partners
When you purchase the right to manage a franchised business, you automatically become a business partner with the franchisor.
This means you have an experienced partner who has already built the business. As a result, you will have many opportunities to learn business practices and will have already received facilities or operational systems for business development, so you can simply focus on executing the business.
Have a place to learn business
In addition to being a lucrative business opportunity, owning a franchise can also serve as a learning platform for entrepreneurs to gain valuable business knowledge and skills. This can be a stepping stone for building other successful businesses in the future.
5 Popular Francise Business Opportunities in Indonesia
Here are a few franchise business opportunities in food or beverages that you can try:
Many people think that Kopi Kenangan is a beverage franchise business. However, this brand does not offer franchise due to the high possibility of each branch having different business objectives.
Nevertheless, the brand still offers the opportunity for anyone to join in the form of a non-franchise partnership.
This partnership is offered in the form of a share distribution, so if you join, you can become a “owner” of Kopi Kenangan by purchasing a certain number of shares.
Mixue Ice Cream & Tea
Mixue Ice Cream & Tea is a popular franchise option. To become a franchisee, you will need a minimum investment of around IDR 800 million to open one store.
This amount includes the start-up costs such as the deposit, management fee, equipment and machinery, initial raw materials, renovation, and rental fees for the store location.
If you’re interested in joining the Kabobs franchise business, it’s important to know the menu offerings and the required capital.
Currently, there is no specific information about the cost to acquire the franchise rights. For more information, it’s best to reach out directly to Kabobs.
If you are interested in the coffee-based beverage franchise business, Janji Jiwa could be a promising option. You will need a capital of around IDR 75 million to obtain the brand license, employee uniforms, product-making equipment, hot menu supplies, promotional media, standard booth design, training, and a standard operating procedure manual.
If you want additional facilities such as a cash register machine and freezer, you will need to prepare an additional IDR 10 million.
Sabana Fried Chicken
To run a chicken-based food franchise business, you will need a capital of approximately IDR 23 million to obtain a full stainless steel cart, deep fryer, equipment, raw materials, as well as survey and training costs. If you want an additional sign, you will need to add IDR 500 thousand to your capital.
Have you made up your mind about which franchise opportunity to pursue?