Thinking of Buying a Franchise? An Essential guide to buying a franchise

Grab The Opportunity, When Once It Is Presented To You!
To gather information about franchising a brand, exploring and researching a particular brand’s website is too mainstream. There are many other ways to research information pertaining to franchise opportunities. Franchise Global is your one-stop solution for your Franchising needs. Our website is an easy-to-access portal for franchise consultations and we’re here to answer all your queries and give you the choice to choose from a wide variety of business options on what will best suit your needs and how to go about franchising them. You can additionally gather information from our list of available franchises by type of business and basic information about each franchise. You can also search using a web platform to find a franchise if you don’t know the type of business you want, or to see which franchises are available for the type of business that interests you.

Buying a franchise means, you will be able to sell the products or services of a specific brand that has the name recognition or reputation and get a support that can help you to succeed. It is like any other business investment.

Know Your Business and Franchise Model
Franchising is a commercial enterprise model that permits the franchisee to make the most of a proven successful business. As a franchise, you get a format developed by the franchisor and the right to use the franchisors brand name for a specific number of years with assistance and support. The franchisor who started the business initially does not 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.
Like the franchisor may provide you with help in identifying an appropriate location for your business, support in marketing, staff recruitment and training with scheduled workshops or seminars.

Costs Involved
When a franchisor gives the right to use the brand’s name for a specific number of years with assistance and support, in exchange you may need to pay some or all of the following:
1. Franchise Fee
Initially, when you get into a franchising agreement, you will be contributing towards a part of the capital investment. Your initial franchise fee will typically start from a lakh and will go up to 6 lakhs based on the city and various other factors.

2. Other Expenses
Significant investment will be utilized for rent or leasing of property, interior, operating license, insurance, equipment and initial inventory. You may also have to spend on any expenses incurred in the ‘Grand Opening’ of each franchise.

3. Royalty
It is always advisable to buy a franchise model which does not include any Royalty charges. You will have a better opportunity to earn for all the hard work and effort that you will be putting in your day-to-day activities, for which you will be the sole beneficiary as compared to a Regular Royalty Based Model.

For example: In a Royalty model, the franchisor may raise the royalty payments during the renewal thereby leading to lesser profits as compared to Royalty Free Models

Franchisor Terms
To ensure uniformity, most brands usually set terms or guidelines on how franchisees should conduct their business. These controls may significantly restrict your ability to exercise your own business but in the longer run, these proper guidelines and expertise will be the right approach for any franchise business during the initial stages of its growth for success.

Location Approval
Many franchisors retain the right to approve a venue for their outlets and may not approve a location you choose. Some franchisors conduct extensive local market studies for the location as part of the approval process and a location or territory they approve may be more likely to attract customers to your business.

Layout or Design Standards
Franchisors may give guidelines for design and standards to ensure a uniform look among their outlets as part of standardization

Restriction on Services you offer or Products you sell
Franchisors may restrict the products or services you sell. For example, if you own a Food chain outlet franchise, you may not be allowed to make any changes to your menu and you will be insisted to follow as per guidelines.

Operations & Guidelines

Franchisors may require that you operate in a particular way as per guidelines mostly. They may guide on pre-defined guidelines like sign boards, employee uniforms, and advertisements or even demand that you use certain accounting. In some cases, a franchisor may request you to sell some products or services at specific discounted prices only not then discount prefixed by the franchisor.

Restrictions On Territory
Brands may limit your business to a specific location or sales territory. If you have an “exclusive” or “protected” territory, it may prevent the franchisor and other franchisees from opening competing outlets or serve customers in your territory, By restricting other franchisees entering your territory the business opportunity

Terms and Agreement
The franchise agreement is generally made only for the number of years in terms of renewal. However, you can lose the right to your franchise if you don’t comply with the terms of the contract. The franchisor can choose to not renew your contract, or you won’t have a right to renew unless the franchisor gives you that right.

Contract Renewals
Franchise agreements may run from as long as 1 year and can go up to 5 years. Renewals are not automatic. At the end of the contract term, the brand may decline to renew or may offer a renewal that doesn’t have the same terms and conditions as your original contract.

Selecting The Right Franchise
Like any business purchase, investing in a franchise will require a healthy upfront investment. Market research is an important factor of investing in a franchise. Look into the history of the business to give you a better understanding. Analyse where the money is being invested and whether the returns are satisfying. Ensure that you evaluate the local supply and demand, whether competitors offer similar products or services, the level of support you will receive and the franchisor’s reputation in the market.

Brand Recognition
Buying a franchise gives you the right to use the franchisor’s name or brand. A well-established franchise with a good reputation is more likely to bring or draw customers than a relatively new franchise. If you invest in a franchise, you’ll be responsible for creating customer demand for its products or services in your territory.

Franchisor’s Experience
Some franchisors in the market are well-established brands with a good reputation. They have years of experience in selling products or services and managing a franchise system. Some franchisors have started by operating their own outlets or services. Find out how long the brand or franchisor has managed a franchise system. Ensure the franchisor has enough expertise to give you support. If the franchisor has little experience managing a chain of outlets or franchise, have proper terms discussed along with guidance, training and other support.

Franchisors Reputation
Always growing a franchise system will increase the franchisor’s name and brand reputation and will equally help you to attract customers. But a graph of growth alone doesn’t make sure that franchisees will be successful in business. In fact, a brand that grows very quickly may not be able to deliver the support its franchisees with the services it promises. Evaluate the franchisor’s resources. Ensure they are sufficient enough to support the existing franchise outlets and if whether they are planning for expansion.



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