Business for rent

A business in the franchise system has 80% chances for success, from the very first step. The steps to be followed, first of all, are contacting the franchiser. Later, a business plan is prepared to provide the possibility for funding. The first amounts to spend are for purchasing the brand, buying or renting an office and expenses related to the establishment of the company. It is also necessary to have financial resources to cover the continuity of the activity for at least three months after the establishment. In some cases, royalty tax for franchise must be taken into consideration also, which represents an amount of 4 to 8% of the annual turnover, but also publicity taxes, applied to the turnover as well, between 2 and 5%.

The most known brand in this system is Fornetti. For this brand, no franchise or royalty taxes are paid, but the franchisee pays 1.500 Euros warranty for the furnace, amount to be reimbursed after concluding contractual relations. “I am one of the first to borrow the Fornetti brand in Targu Mures. The total investment is somewhere at 200 million ROL. I can say that it’s a profitable business, the more stores you have, and for this I consider you don’t need a well-known brand, but a better quality-price relation. There are conditions for granting franchise, thus a potential investor of the Fornetti brand must make some calculations, but the first rule is to do as they say (the franchisers, n. ed.). And I think money doesn’t matter as much as liking what you do”, Gyorgy Csiroja, one of the investors of the Fornetti brand in Targu Mures declared. The Fornetti brand appeared in 1997, in Hungary, and since then this type of franchise has known a continuous development, and in the following period, the brand was borrowed through the entire Europe. In the Romanian market, the Fornetti brand has the largest network of the 100 existing franchises. Kenvelo is another shop that opted for franchising, borrowing the Czech clothes, shoes and accessories brand. “The brand belongs to a company in the Czech Republic, but it was adopted in many countries in Europe, especially in Eastern Europe. Since 2000, Kenvelo is present in the Romanian market too, and sales are going pretty well. Since then, until today, the shop network is extended to 40 units in the entire country. I consider we have no competition in Targu Mures”, declared us the manager of the Kenvelo shop in Targu Mures, Ana Varga. For the franchiser, the one that lends its brand, the advantage is the attraction of the capital of the franchisees, which attracts the volume of investments and profit. Introduction in the new markets is effectuated with reduced investments, and the fame of the brand, the company and the products increases. Among the disadvantages we can mention the image of the company, which depends on the success of the franchisees, and in case of failure, the entire franchise network will be affected. On the other hand, the franchisee has the guarantee of success through sale under a brand already known, receives training from the franchiser and has right for decision. For this, he has to pay a tax for access to the business, which varies depending on the brand borrowed and the conditions set by each franchiser, and the time period he performs the activity is limited, according to the contract signed between the two parties. (B.D.)