Is Franchising in a Bakery a Way to Strengthen Its Position?

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I recently wrote that the bakery industry, and to a certain extent the sugar industry, is resilient to most of the economic and political upheavals, and that a recession will strengthen the position of a local bakery rather than weaken it.

This directly affects producers of goods and services, especially luxury ones. Baking is a cheap food product, without which it is difficult to imagine a normal existence.

Bakers will keep their incomes at their current levels because of the specifics, while other entrepreneurs will experience crises and bankruptcies, and bakery owners, even though they won't earn more, will become more economically strong because others will become weaker.

I've been writing for years about selling your own bakery profitably, and this time, in a recession, I'm encouraging you to take advantage of the opportunity to grow your bakery or start additional types of businesses.

So the pandemic is an opportunity to strengthen the bakery in the local market, which can be done by expanding the sales network by buying up the falling stores, or by starting a new kind of business that will run in parallel.

Someone once noticed that bakeries can sell meat and junk at the same time at a separate stall, and bakeries can also serve coffee and exquisite cakes, and they can sell dietary supplements or organic products.

The start-up of a parallel business is burdensome but significantly improves the firm's stability, which can be important in a difficult economic recession.

There are many difficulties and dangers associated with starting a parallel new business, so you can take advantage of ready-made business solutions known as franchises.

Every entrepreneur planning to start a new franchise-based business must decide whether to start a new franchise or buy an existing one.

This is worth mentioning, as during the pandemic and recession, there will be many opportunities to buy existing franchising networks over time.

So, do you want to start a new franchise or buy an existing one? Both have their drawbacks and advantages.

1. The advantage of a new franchise is that the price the cost of starting such an activity will always be lower than the purchase of an existing one.

Starting a new business is always a bigger undertaking and a greater risk compared to buying an established, existing franchise.

A new franchise is a new piece of technical equipment. Usually when you buy a business, you inherit the existing equipment.

Three, a new business is a new people, a new procedure, a new habit, an opportunity to realize your vision of a parallel company, of course, as part of a franchise agreement.

1. an existing franchise has a history, you know how much revenue it has, what products or services it makes, and what the seasonal sales are. when you start a new business, you don't have that information. when you buy an old company, you know what you're buying, when you start a new business, you go into a dark room.

I'm not going to write about the flaws, but it's worth noting that the existing franchise doesn't have any image burdens or legal merit.

2. Buying a ready-made franchise business is more expensive but less risky. The higher price can be offset by a better deal with the franchisor. Grounded subsidiaries that have achieved a high sales position and have shown long-term stability have a much better negotiating position with the franchisor.

3. A company that has been in operation for many years can usually boast of a large customer base, a well-established reputation and stable and favourable cooperation with contractors and suppliers.These values are the main source of competitive advantage in the local market.

W-MOSZCZYNSKI-2020-9-13

The pandemic-induced recession is an opportunity for

This project can be implemented using a franchise agreement, which reduces the amount of engagement and the risk of failure.

Wojciech Moszczyński — graduate of the Department of Econometrics and Statistics of Nicolaus Copernicus University in Toruń; specialist in econometrics, finance, data science, and management accounting. He specializes in the optimization of production and logistics processes. He conducts research in the area of the development and application of artificial intelligence. For years he has been engaged in the popularization of machine learning and data science in business environments.