Everything You Ever Needed To Know About Franchising

07/04/2018 08:00 | Start a business

Everything you need to know about franchising

If you've always dreamed of starting your own business, the chances are that you've considered investing in a franchise model. After all, famous franchises are all around us, and it's pretty difficult not to find the prospect of running a successful business with the support of a reputable and well-established brand very appealing.

But is franchising right for you? What are the advantages and disadvantages of franchising? And how do you identify the most successful franchises from the bad ones? Well, to help you answer these questions here is everything you ever needed to know about franchising well almost.

Is the franchise model right for you?

It takes a particular type of person to make a successful franchisee. And while it's not for everyone, if you possess any of the following attributes, you could be the perfect fit for a career as a successful franchisee.

  • You like following rules
    The most crucial element of the franchise model is that the franchisee must stick to the strict regulations that are set out in the franchise agreement to be a success. This doesn't mean that you can't be innovative as a franchisee, but it does mean that the franchisor is in control regarding many of the critical business decisions. So, if you've got a strong entrepreneurial spirit and dont like following the rules, franchising may not be the best route to business ownership for you.
  • You like security
    Of course, there is an element of risk with every business and buying a franchise is certainly no guarantee of success, but it does offer a safety net. Investing in a proven business model with a tried and tested system does mitigate many of the risks that are associated with owning your own business. If you crave this security, then franchising may be the right decision for you.
  • Youre hardworking
    It's a common misconception that running a franchise is much easier than owning an independent business. Of course, as a franchisee, you do get support and training from the franchisor, but the most successful franchises don't happen by chance. It takes hard work, dedication and motivation to run a profitable business, whether it's a franchise or otherwise.
  • You can afford to fund your new business
    Theres no getting away from the fact that there are quite a few upfront costs that need to be paid when you purchase a franchise business opportunity. The initial franchise fee covers things such as the cost of your recruitment and training, and ongoing costs are charged to fund the continued support that you receive as a franchisee. Before you even start to consider franchising, you should ensure that you have adequate financial resources to invest in your dream franchise.

So, you've got the traits that are required to be a successful franchisee, but what is it like to own and operate a franchise business?

What are the pros and cons of buying a franchise?

Just as with any business decision, there are advantages and disadvantages to becoming a franchisee. Here are just some of the benefits and drawbacks of investing in a franchise:

Pros

  • When you open your franchise, particularly is its ones of the many famous franchises, its likely that youll have a ready-made customer base thanks to the instantly recognisable brand.
  • As the business model has already been developed and perfected by the franchisor, youre able to get your business up and running much quicker than if you were to start an independent business from scratch.
  • If youre new to business ownership, the support of the franchisor and the training provided once the franchise agreement has been signed is invaluable. Starting your new venture becomes less stressful with no need to learn via trial and error.

Cons

  • The start-up costs of buying a franchise tend to be higher than if you were when starting an independent business. Also, the continued support that you receive as a franchisee comes at a cost. Ongoing fees and royalties are charged which can lower your profit margin.
  • Developing your business concept and building your company alone enables you to have full control over every aspect. You get to choose your dcor, products, branding, theme and marketing. These are all elements of a franchise business that the franchisees have no say in whatsoever.
  • With no franchise fees or royalty payments to make on a regular basis, theres a chance of increased profitability in the early days of an independent business.

You need to weigh up whether being a franchisee or an independent business owner is right for you taking into account the pros and cons. If you feel that the advantages outweigh the disadvantages, then its time to start looking for the right franchise to invest in. But, how can you be sure that youre choosing one of the most successful franchises?

The good, the bad and the ugly

The British Franchise Association (bfa) is the self-regulatory body for the franchise industry in the UK. They have made considerable steps to improve the standards and ethical business practices in the franchise sector, but it would be nave to think that there are no bad franchisors out there.

To ensure that you dont jeopardise your dreams of becoming a successful franchise and risk losing your franchise investment, here are some tips to help you identify the signs of a bad franchise:

  • A high-pressure sales pitch
    If the franchisor tries to rush you into making a decision or attempts to lure you into signing the franchise agreement by setting time limits or introducing discounts, you should walk away. Its in the interests of the franchisor to ensure that youre making the right decision and they should never pressure you into signing before youre ready.
  • A damaged reputation
    In this digital age, its easier than ever to perform some simple research online to find out more about the franchise. If you discover that there have been some issues with either the business or the franchisor, particularly if theyre still unresolved, then see this as a warning flag.
     
  • Inadequate training
    One of the key benefits of buying a franchise is the training programme that the franchisor can provide. During your due diligence, if you find that the quality or quantity of training on offer is weak, then you should reconsider whether this is the right franchise opportunity for you.

Franchising can offer you the freedom and flexibility of being a business owner with less of the risks. If youre prepared to work hard and do your research to find the right franchise to invest in, then youve got a great chance of becoming a happy and profitable franchisee.

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