Checklist for selecting excellent franchise headquarters and excellent brands for Korean franchises

◆ According to a survey of 300 franchise headquarters conducted by the Korea Chamber of Commerce and Industry, 58.0% of the companies responded that the market situation in the franchise sector is in the early stages of market introduction, with 29.3% responding to market maturity and 11.7% responding to market saturation, indicating that franchise brands are still likely to grow. However, regarding the current profit and loss status of new brands, 72.7% of companies said "profit generation" and 20.3% said "loss" and 20.3% said "marketing" (39.7%), "recruitment of franchisees" (34.0%), "maintaining quality by franchisees" (11.7%), "smooth network with franchisees" (4.7%), "employment of excellent manpower" (3.3%), and "product development" (2.7%) can be used as criteria for selecting excellent franchise headquarters from the perspective of prospective entrepreneurs. 
 
◆ Selection of Franchise Brands The life expectancy of Korean franchise brands is very short, around five years. (Of course, top-tier brands and top-tier franchise headquarters often live a long life.) It is also true that competition is fierce and the probability of success and survival is low. However, in the case of excellent brands, the business history has reached 14.3 years, which is three times the life expectancy of domestic franchise brands. How should we interpret this data from a prospective founder's point of view? It is no exaggeration to say that the success or failure of a franchise start-up depends on the choice of the franchise headquarters. This is because it is very likely that the right franchise headquarters will lead to excellent brands. It is not easy to research all thousands of brands by selling products, and it is practically impossible for the franchise headquarters to find out and evaluate information on internal capabilities in addition to the appearance of the company. Based on the information collected through various channels, we should select the franchise headquarters by judging the eligibility criteria based on the following. 
 

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※ criteria for determining
If you want to check whether the information disclosure provided by the franchise headquarters is registered with the Fair Trade Commission or whether the contents are the same as those registered, you can check the information disclosure on the same business sign (brand) on the Fair Trade Commission's franchise business transaction website for comparison.

 

The most important things that prospective entrepreneurs consider in the choice of the franchise headquarters are brand awareness (32%), competitiveness of the franchise system (32%), profitability of franchisees (18%), cost of franchise start-ps (9%), and franchise support programs (9%). In addition, 54% answered that they were willing to sign a franchise contract even if royalties were imposed. 
 
 
1. Do you have sufficient business experience and direct management experience of the franchise headquarters?
 
2. Is the brand concept clear and the distinction from similar brands clear?
 
3. Are the products and services provided by the franchise headquarters marketable and professional?
 
4. Brand life is an important factor in determining a franchise's business feasibility. 
 
5. In the past three years, the financial statements have been in good business condition, and are you not repeating frequent business closures?
 
6. Is qualitative growth such as external growth and operating profit continuing, such as sales and the number of affiliated stores?
 
7. What is the proportion of the franchise headquarters' investment in intellectual property ownership and R&D?
 
8. What is the reputation of the industry or franchisees?
 
9. Is the brand renewal or marketing method evolving according to the changing times?
 
10. What is the management philosophy and character of the representative of the franchise headquarters?
 
11. How is the human resource management and employee training system of the franchise headquarters?
 
12. What is the level of investment and infrastructure in logistics and information systems?
 
13. Are you pursuing qualitative growth rather than quantitative expansion of affiliated stores?
 
14. Degree of HQ support and items
 
15. Number of SV employees compared to total number of affiliated stores: Number of affiliated stores per SV
 
16. What is the education and training system like, and are educational facilities, spaces, and professional education personnel assigned?
 
17. Do you have a history of national accolades and certification?
 

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For example, the results of the franchise level assessment not only provide information to reduce the failure of start-ups from the perspective of franchisees, but also provide low-

interest loans to franchisees who choose brands with grades 1 to 3.
 
▶National rewards (example): Korea Franchise Awards (Ministry of Knowledge Economy, Korea Franchise Industry Association, Korea Franchise Industry Association), Excellent Restaurant Franchise Evaluation (Ministry of Agriculture, Forestry and Fisheries, Agricultural and Fisheries Products Distribution Corporation)
 
▶National certification (example): Franchise level evaluation system (Small and Medium Business Administration, Small Business Promotion Agency)
 
18. Provide customized support and win-win programs for merchants
 
The question is, "Does a franchise have to live in order for its headquarters to live?" 
How many headquarters will keep the slogan that most franchise headquarters shout? 
Is there a franchise headquarters that considers the welfare benefits of franchisees and devotes a lot of time to communication and shared growth? 
 
The answer is yes.
There is also a headquarters that prepares a variety of customized support programs for the store's store situation and 

operates an 

in-epth training course that fosters a "management" mind and establishes management strategies rather than a "business" necessary for the store's operation. There is also a franchise headquarters that allows franchisees to use their time efficiently by recognizing the completion of training if they have completed a similar training program from a university or related organization instead of various 

re-training programs at the headquarters that must be completed when renewing their contracts.
 
There are also bad practices that are repeated every year. 
 
The unfair practice of the headquarters unilaterally forcing merchants to improve facilities or expand stores and opening additional merchants in the business area 
 
Where the headquarters of the franchise does not comply with the self-imposed self-regulation
 
Where the closing rate of a franchisee is concealed or the estimated sales amount is not disclosed, and the period of consideration of the information disclosure letter is not observed 
 
An example is the case of compulsory sales regardless of essential items and recommended items. 
 

 
◆ Commonalities of Successful Franchisees
 
○ After retirement, worry about the business you want to carry out for enough time

 

○ Since the initial funds are not available, we take care of all the tasks such as managing food materials and serving halls.
 
○ Detailed data management through point-of-sale (POS) and more
 
○ QSC Practice: Purchase food materials directly every morning and visit the store frequently to check cleanliness and employee service levels
 
○ Employee management: full-time employee treatment, bold incentives based on performance
 
○ Even at your own expense, ask the franchise headquarters for training until you are fully familiar with the manual. I've seen many cases where these people don't mind training at nearby universities or private service academies. 
 
○Learn the characteristics and differences of the (Shin) menu through tasting and cooking as well as self-review so that there is no problem in customer response.
 
○ Conduct an inquiry program. Check the work of the previous day or today and share the direction of improvement of the work.
 
○ We discuss how to handle customer claims and create an atmosphere for employees to work with a sense of ownership.
 
 
※ Megapranchiser type (multi-store operation)
 
○ a franchisee of an enterprise that operates the same brand, heterogeneous brand, or other industrial brand at the same time
○ Easy to manage inventory because it can be moved from point to point. Also, efficient labor cost management such as flexible manpower allocation
 
※ Pre-experience, post-startup type
 
○ If you gain confidence after getting a job at a franchise of a similar brand that wants to start a business, you will reduce the risk of investment in the form of starting a business, while preparing for an emergency.