Starting a business of your own from scratch in opposite to franchise business means;
starting with your own unique products, securing financing via banks or private investment, a business model and having an amazing marketing plan.
Basically, you need to be a jack of many trades and be a master of them too.
That’s where ‘franchise businesses’ come in.
Opening your own franchise business gives the ideal sense of balance between the freedom of being your own boss and the intimidating nature of starting a business from scratch.
A franchise business provides you with all of the benefits of starting your own business with the added advantage of an established business model and recognised branding and advertising.
However, don’t you be tempted into assuming that starting your own franchise business is easy.
There are a few vital considerations to make before becoming a franchise business owner.
BEFORE YOU START A FRANCHISE BUSINESS
Before plunging deep into the well of franchising, do well to consider whether it is actually right for you.
While the benefits of opening your own franchise business are well stated, the fact remains that franchise business just isn’t for everyone.
Once you have established the initiative of starting your own franchise business, the next step is to reflect on which franchise business you really want to operate.
A widespread error among franchisees is to pick for a franchise business they take pleasure in using as a customer rather than selecting one that serves them as a business possessor.
The best way for you to approach this is through the long-established mode of undertaking lots of research.
Draw up a list of franchisors fascinated about expanding into your area and look into all of them meticulously.
Although this can seem unnecessarily time-consuming, you may find that a franchise business you wouldn’t have otherwise considered could offer you the perfect working environment.
That said, make sure you have at least some interest in the products you’ll be working with.
Finally, verify your finances.
Money is the hammer which steers the nail of your franchise business into the wall of the environment.
Despite the obvious benefits of opening your own franchise business, it doesn’t come cheap.
You’ll have to bear the costs of:
- account for shop fittings,
- staff costs,
- working capital and
- your own expenses.
Make sure to plan for everything before you go to a bank or investor looking for a loan for your franchise business.
The good news is that actually securing the funds should be easier than if you were going it alone, as franchise business with a proven history of success is seen as much more of a ‘safe option’.
Many people decide to start their own business by adopting an already successful business model.
This is the franchise business option. Buying a franchise business gives your commercial plans a head start.
There’s a lot to be said for opting for the franchise business route but you must make sure you make the right choice of franchise to suit your talents and ultimate business objectives.
A franchisor is the business rights owner of the concept and operation.
A franchisee is someone who buys the licensed rights for an agreed fee from the franchisor to operate the business in a particular territory for an agreed period of time.
If you know sales, are outgoing, personable and enjoy mixing with a wide range of people then a business directory franchise could be for you.
You’ll need to make your own mark to build franchise business and maintain the gains you’ve made.
Everyone is given the same tools to be confident ‘front of house’ and run an efficient ‘back office’.
A franchise business is not a fast track to riches; it takes time to grow and it requires dedication and daily attention.
WHAT TO DO TO START UP A FRANCHISE BUSINESS
Understand What a Franchise Business Is
A Franchise Business refers to a legal arrangement in which one party (called ‘the franchisor’) grants the rights to market products or services using the trademark of their business to an individual or group of people (called ‘the franchisee’).
The franchisee then markets the products or services using the methods specified by the franchiser, and in return, the franchisee pays the franchiser specified royalties and fees to use these rights.
Rather than an actual business or industry, franchising is a method businesses used to market and distribute their products or services.
Both parties share an interest in ensuring the company succeeds.
Research and gather information for the best franchise business there is today
There are hundreds or thousands of different franchise businesses in the market nowadays.
So you need to study and do great ample time of research on what are the trends in the market as well as what kind of franchise business suitable in your area.
You can check websites about more franchise business information as well as read magazines and newspapers.
Also, check the reputation of the franchise business you wish to have as well as check their pricing and other relevant information about the products and services.
You need to ask questions from customers of the franchise business if they are satisfied with the products and services as well as their return rate to that business.
Look for a sturdy business plan as well as great business profit model
You need to thoroughly inspect and understand the business plan of the chosen franchise business so that you can implement that plan for success.
Check as well if the franchisor’s profit models are effective and efficient.
You can check their rankings in the market as well as their number of years in the business.
If they stay afloat in the market for number of years it means that this business has a strong business profit model.
Thoroughly check if the products of the franchise business you have chosen can be acquired elsewhere with lesser cost.
For example, it would be hard to franchise a local DVD or CD stores nowadays because of the rampant distribution online.
You can download songs and movies online for free. So the profits for this type of franchise business are low.
Have a great deal of knowledge about the financial aspects involved into franchise business
You need to know how long it will take to earn your investment back.
Also, know the cost involved in running the franchise business.
One is the overhead cost.
Examples of this cost are salaries of the staff, tools needed for operations, as well as rentals and many more.
The other kind of cost is variable cost depending on your sales.
Examples are fuels for delivery van if needed in the business as well as materials essential to the outcome of the product.
For example in an ice cream parlour materials needed are cups, spoons and many more.
The Premises of the Franchise Business
You need to determine if the franchise business you are planning to start is mobile or property-based.
Some franchises may be run from your own home, whereas others are operated with customised vans.
The location of the franchise business may be crucial in the development of the franchise network.
Hence, the franchiser may choose to retain control of the premises.
Know and comprehend the contents of the contract
The franchise business contract is the agreement signed by both the franchisor and franchisee in the terms of running the business.
These are where you put in writing all the agreed concepts in the franchising business.
So if you were a franchisee you must certainly read and understand first what are the rules stipulated in the contract.
Know if it is for your benefit. When you fully understand the stipulations in the contract you can ask the franchisor some amendments if it is not in your benefit.
You can also hire a legal team to check on the contract but if you have read and understand it you can make sure that your legal team will not twist your arms in legal fees.
Assess yourself and know your skills and capabilities
Most importantly, you need to assess yourself if you are prepared to handle a franchise business.
Also know the skills you have as well as the skills you need to develop in order to run the franchise business to success.
You need also to know how to deal with pressures from the business as well as your capabilities in handling problems.
When you do all of these listed above and assess yourself that you can run a business, then take the reign and drive your franchising business to success.
Review the Benefits of Franchise Business
You will also need to do a breakdown of all merits involved in your choice of franchise business.
In other words, list out all the advantages.
Franchising aids quick and less expensive expansion; and the more franchises that exist, the greater your purchasing power.
If you are considering purchasing a franchise business, you can fulfil your dream of becoming self-employed and start running your business more quickly.
As a franchisee, you will normally gain valuable ongoing support, training and advice from the franchiser.
Raising finance to purchase a franchise business is also much easier than raising the money to start your own business.
Benefit 1 – Training and Support
Franchise businesses will give new franchise business owners plenty of training and support in the beginning.
Franchisers get a fraction of the profits so it’s in the best interest to ensure that the spin-off franchises do well.
Smaller franchises offer people consequential support.
Benefit 2 – Purchase Company Model, Not Just Name
The big reason franchises tend to last and thrive is that the business model is already working.
It’s not just about the name or the brand; it’s the model itself that helps to make this franchise successful.
Benefit 3 – Bargaining Power
When you have a franchise business, you have some bargaining power with your suppliers.
Independent, new business owners don’t have this kind of power or luxury and must earn it, unlike a franchise business owners.
Benefit 4 – Expert Support
When you get involved with a franchise, your business is not alone.
If you ever have problems or questions then you seek out some advice.
Whatever franchise business you go into, you’re bound to have hundreds of people you can turn to that would love to give you advice so that you succeed.
Many larger franchises will also give individual training and support.
Benefit 5 – Well Capitalized
Most franchises are well capitalized, which makes them have a high survival rate.
Most start-up businesses don’t have this luxury.
People who want to get involved with franchise business usually have just enough requirements to buy into the business.
Consider the Disadvantages of Franchise Business
It isn’t enough to consider the merits of franchise business without considering the setbacks involved.
This way, you are sure of a better footing in dealing with challenges as they may arise.
As a franchiser, you will lose a significant amount of control over your business.
As a franchisee, you will lose creative freedom as you need to follow the requirements established by the franchise owner.
You also have to pay a certain percentage of your profits to the franchiser for your franchise business.
FRANCHISE BUSINESS RESOURCES