Points to consider before buying a franchise
On the off chance that you've for a long while been itching to maintain a business however discover the beginning up stage excessively overwhelming, you ought to consider buying a franchise being equal.
Offering both the adjustability and independence of being a small business owner, plus the name and infrastructure of a large corporation, a franchise can be the best opportunity for someone who is interested in becoming an entrepreneur.
For opening a franchise one requires a significant investment of capital -- often including a heavy franchise fee along with monthly royalties and advertising costs. Everyone is not that rich to have access to that kind of cash. So, if you need a business loan to finance your franchise investment, you might find it challenging, difficult to navigate the various options available.
The diversifying model works this way – you (the franchisee) purchases the rights to advertise and disperse the products and enterprises of another organization (the franchisor) and to utilize its business name for a fixed timeframe.
As you are basically acquiring another organization's demonstrated plan of action, franchising can be a lot more secure wager for beginning another business. While this has its focal points, there are additionally drawbacks to diversifying that may not agree with a few.
So before you decide if it’s right for you, here are 6 factors you should consider before buying a franchise.
As is the case before starting any new business, find out if there is a demand for the product or service you intend to offer. If you are buying an overseas franchising licence, be wary that what sells well in other countries may not be equally well-received here.
So don’t jump on the opportunity without doing your research. The potential for expansion should also be considered if you intend to branch out to multiple outlets in the future.
2. Track Record
Just because a company offers franchising opportunities doesn’t mean it’s worth taking up. You should only look at companies that have proven themselves successful at franchising their business.
If possible, speak to current franchisees about their experience so you get a clear idea of whether the franchise is worth investing in.
One of the biggest barriers to buying a franchise is that unlike starting your own business, where all the capital is invested in your operations, a sizeable portion of your initial capital goes to the franchisor as fees for training, equipment and licensing rights. This figure can range from a few thousand dollars to a few million.
Look at what the franchise company will be providing in exchange for the franchise fees, and evaluate the time it will take to earn your upfront costs back to determine if a franchise is a sound investment.
If the franchise is a well-known brand, there may already be lots of franchisees operating in the vicinity, and not to mention other rival companies. Consider first if the franchise and industry you’re choosing is a strategic business to enter as it’ll be hard to establish yourself if there are many competitors in that market.
If the product being sold is unique then competition will not be an issue. But for most businesses, this will not be the case.
A major advantage of franchising is the training and support offered to franchisees. If you don’t have any entrepreneurial experience, then it is advisable to choose a franchise that offers substantial training. Some even provide on-going support even after your franchise is up and running.
With proper guidance and training, the chances of your franchise being successful right from the start will increase greatly.
It is very common for franchisors to impose certain restrictions on how their franchises are to be run. They usually require franchisees to follow guidelines and standards which may encompass things such as product offerings, prices, operational hours, and store design among others.
Starting a new business is not a decision you make overnight. Weighing the pros and cons of entrepreneurship is an endeavor that you will research exhaustively and have countless conversations and questions about. One appealing option that you may consider during your research is franchise ownership.
For many would-be entrepreneurs, franchising is an interesting opportunity as it offers the chance to be your own boss without taking on the significant risk that comes with starting a business from scratch. Franchising offers several advantages for would-be business owners, but like anything, there are also some disadvantages that you should be aware of before embarking on a franchise purchase.
Buying a franchise can be a quick way to set up your own business without starting from scratch. There are many benefits of franchising but there are also a number of drawbacks to consider.
Ten advantages of franchising
The risk of business failure is reduced by franchising. Your business is based on a proven idea. You can check how successful other franchises are before committing yourself.
Products and services will have already established a market share. Therefore there will be no need for market testing.
You can use a recognised brand name and trade mark. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'.
The franchisor gives you support - usually as a complete package including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
No prior experience is needed as the training received from the franchisor should ensure the franchisee establishes the skills required to operate the franchise.
A franchise enables a small business to compete with big businesses, more so than an independent small business, due to the pool of support from the franchisor and network of other franchisees.
You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.
Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.
Relationships with suppliers have already been established.
Franchise over Business
When you decide to be your own boss you’re faced with many emotions. There’s a certain excitement that comes with running a successful business, making the important decisions, establishing your hours, and working on your own terms …
But then there is this anxiety as well in not knowing if you will succeed. The chance that your business could fold and you could find yourself without a job and in a heap of financial debt can be unnerving.
Of course with any business venture, there’s always a risk factor. Depending on your comfort level, there are options to take some of the pressure off so you can focus more on launching and marketing your company and less on the logistics of starting from scratch.
For more exciting franchise-related information and the best franchise opportunities in India, kindly register at https://www.franchisebazar.com/entrepreneur-registration and for further help give us a call on +91-9844443200
Written By: Yukta Palekar
Written By: Resham Daswani
Written By: Yukta Palekar
Written By: Divisha Pandey