It is every entrepreneur’s dream to go into the expansion with one word in mind – Franchise. It is an option that intrigues most businessmen into investing their time and efforts while keeping in mind the risks involved. A franchise business, allows one to tap into their organization’s potential and dig deep into uncharted depths as you project your business’s brand name and reputation, keeping in mind a designated customer base, training and support system from day one for your business.
Before you take one step forward towards franchising, ask yourself, ‘Do you think that you have found your ideal franchise?’ Answer these questions to find out if it’s the right opportunity for you!
1. Do you really understand the franchise model and its target market?
With the easy premise that a business is started which is then replicated, franchising is a commercial enterprise model that permits the franchisee to make the most of a proven successful business.
Brand or the franchisor who started the initial business doesn’t necessarily need to spend all their money on developing it. As an alternative, they become a franchisor and search for a franchisee to buy and run the commercial enterprise as a franchise.
2. Are you making a right choice, Will it suit you?
Being a franchise owner is a great step into entrepreneurship but it isn’t for everyone. Conduct a self-assessment to find out what kind of franchise business really would best suit you. Look at your capabilities, interest, abilities and most important your experience of relevance. Using this kind of self-assessment prior to buying a franchise will help you to choose a franchise business a lot easier and give you a higher chance of success in the long run. Compile a list of potential franchise options and sort them in accordance with your strengths and confidence.
3. What are the Terms?
Before you choose any franchise make sure that you are aware of the franchisor’s unique policies, controls and guidelines. These directives are set up to keep up the consistency of the brand, their merchandise and the service that the consumer receives. Franchise owners often experience the advantages of working for themselves and the perks of being their very own boss, however, there are limitations. In most circumstances, the franchisees are legitimately committed to complying with the brand's procedures and guidelines.This can be anything from promoting, marketing, accounting and standardized regulations down to interiors and hiring of staffs. In case you're not willing to accept the terms and conditions owning a franchise might not be for you.
4. What will be the total investment?
Similarly as with any business purchase, investing in a franchise will require a healthy upfront investment and some ongoing payments. However, this depends on the franchise business you choose, based on the nature of the business and its requirements.
Keep in mind that you will also be responsible for taxes, insurance, salaries, marketing and so forth, to ensure that you incorporate it into your financial plan.
Make an accurate analysis of the total investment that will be required for interior, assets and leasing of property to make a realistic estimate of what you will need to spend. You can even estimate your expenses by means of matching the investment which you will require with your anticipated returns.
5. Have you done enough research?
Ensure that you research the business for which you are buying a franchise. Try to talk to other franchisees as they were all in your position at some point. Franchises should offer an encouraging group of people of franchisors, franchisees, training and support system to make sure the one you chose has a healthy communication involved.
Market research is vital and is an important factor when investing in a franchise. Look at the history of the business to give you a better understanding, Analyse where the money is being invested and whether the returns are satisfying (Don't just simply concentrate on the benefits and success stories! A failure rate is equally important!)
Ensure that you evaluate the local demand and supply. Look at the market, is it developing or in decline? Who are your potential competitors in the particular territory? Understanding your customers and their environment will definitely help to determine the sustainability and profitability of your franchise.
Franchises terms and agreement are often non-negotiable. Prospective franchisees should always ask for clarification if they are uncertain about any points of the agreement before signing with franchisors or brand.