Exploring Key Factors for Profitable Franchise Ownership

Spending bucks on a big name is not required when the efforts can be duplicated. If you’re opting for a franchise route, you don’t actually have to start from zero as it is already at its zenith and has proved that this business model works. A smart entrepreneur deeply studies the range of logistical, financial, and marketing advantages offered by a franchise company prior to deciding the kind of business to commence. There are certain benefits to be considered while owning a franchised business:

Advantages of taking franchise business:

• Established Brand name

Building a brand is not a two-minute noodle game. It might take a couple of years for a newbie to reach the level of recognition its competitors are enjoying. But no, this feature doesn’t exist in terms of buying a franchise. Big brands like Domino’s and Subway have already broken their banks on logos and branding, and here the Franchise gets full advantage. Most of the Franchisors are well identified to the public as they’ve survived decades already in their respective business. If the brand is remembered, and so are the franchisees, being the successful brand identities.

• Financing

Collecting seed capital is another challenge crawling in the way of opening a business. Besides, the hesitation factor to invest in a new venture exists here. Investors are usually more interested in inventing franchise chains that have an established network, efficacious support structure, and secure brand. In a few cases, finance may be collected from the franchisor, making it simple for the new venture

Also Read: How to open a Burger King Franchise – Requirement, Cost & Profit

• Low chances of failure

Statistics say franchise buying is more successful than starting up an independent business. Where the franchisees stand an 80% chance to survive, the people who are new to a business, in the starting critical point of time have a 70-80% chance of failing. Thereby, Franchise gives the impression of being “less likely to fail”

• Ongoing Support

If you’re buying a franchise, you are not alone. You will have the ongoing support of the franchisor. They want you to do well, after all, you are a part of the developing family. They will be available to train you in everything from accounting to the technology involved to taking money and asking questions.

Owning a franchise is certainly an ear-friendly expansion route for entrepreneurs as you get good ways of marketing and a proven business model. Every franchisor has their different rules that regularize the franchise business you purchase from them. The key point is to introduce yourself to all the regulations of the company so as there will be no surprises down the road. Read the below-mentioned rules and get an idea if you are opting to buy a franchise:

6 Factors To Consider While Owning A Franchise

1. Consumer demand for franchisor’s product

Check whether there is strong consumer demand for it and whether it is expected to grow or not. Find out how many competitors are there in the market. Do a complete research and make sure you can sell the franchisor’s products in your marketplace.

2. Franchisor’s business record

Keep a check on the franchisor’s brand and his reputation in the market. Contact existing franchisees to know their experience. Note if the infrastructure is stable and comprehensive.

3. Franchise agreement

Check the franchise agreement if the terms and conditions mentioned in the agreement are up to your expectations or not. Discuss with the franchisor if you want to add or edit any clause.

4. Financial Capability of the Franchisor

Knowing the franchisor’s background and his financial strength will help you in making a decision whether you should take his franchise business or not.

5. Franchisor’s plan for business expansion

Discuss the franchisor’s plan for growth and the target markets. Will your franchise business be placed where the demand and traffic are likely to be.

6. Support provided by the franchisor

Ask the franchisor about the support he will provide, the return on investment, and how much time it will take to make money.

The 5’s of Franchise

Franchise business involves planning to buy a business that has already predetermined rules itself. Take a franchise that is already at its zenith while enjoying the benefit of being your own boss. To make sure you are taking the right franchise, have a sight to the steps of the franchise:

1. Discover Options

There are lots of franchise opportunities available, consider as many as possible before finalizing your decision. Find out the kind of franchise you are looking to purchase. If you have some options already in your mind, then do complete and detailed research on that type of franchise. The moment you purchase the franchise, you have to do every task related to the new franchised business with full dedication, and for that, you should choose a business you are passionate about.

2. Financing

If you are purchasing a franchise that is not offering financial support, then you have to secure the finance on your own. In some cases, companies offering franchises will also provide finances but sometimes they will not. Without proper financing, your new franchised business can’t run.

3. Negotiation

It’s time to discuss the process of buying a franchise with your franchisor. As you already know the details and now you have to discuss the details with the franchisor like how he markets his products and how he will provide marketing support. Have your questions ready when you talk to the franchisor, and make sure that all answers are satisfactory to you.

4. Find Location

You will be provided data to choose your preferred location for opening the franchise. If you are allowed to decide location for your franchise then choose one that makes sense and is profitable for your franchise. In some cases, the franchisor asks for your intended location before granting a franchise but it doesn’t apply to every franchisor.

5. Review Franchise Agreement

Check that all the terms and conditions written in the agreement are agreeable to you. Review the agreement, if want any changes then discuss them with the partner and sign the franchise agreement.

Buying a franchise is not an eye-blinking task, you have to take every step very carefully. Get the knack of every franchise-related information and be the boss.