You may have read about this topic so many times before. But for the benefit of those who are thinking of franchising a business most especially now that we have just started a new year, this can be a guide towards their decision of finally starting up their own franchise business.
Thoughts Before Franchising
You may feel the need of having a stable source of income. And starting it on your own may fear you. A lot have considered starting up with a franchise business because they feel that this would somehow give them an edge over starting their own business from scratch. So how do you start? There are things that you need to consider prior to finalizing your thoughts on having a franchise business.
• You very well know that any kind of business could be risky. Are you prepared to take that step in risking your own money to start with a business? It will help you decide if you are ready for that bold move if you try to look back and think of any situation from your past that needed you to be put on a situation where you needed to make a decision with regards to handling money. How were you able to deal with it? How long did it take you before you were able to get pass through it?
• As franchisees, there are rules that you need to observe. They rules are clearly stated on the agreement. You should be amenable to all that has been written. Otherwise, you will get yourself in trouble. There is a need to maintain whatever the franchisor has started with the business thus securing and ensuring that the standards will remain unchanged.
• You may need to do a little self-examination prior to franchising. Being a franchisee you are expected to follow the rules. Are you capable of abiding by the rules? If not, then that would be a sign that franchising may not be for you.
• Do a simple math : ASSETS - LIABILITIES= NETWORTH
Some franchisors may have a specific net worth requirement. Not unless you are franchising a small business then that should not be a problem.
• To know which franchise to choose, instead of just choosing among what is available for franchise is focusing on your skills and capabilities so that you are equipped with the proper tools in building the business.
• Any earnings-related questions may not be easily disclosed by your franchisor representative. The best way is to ask from current franchisees and somehow that can help you decide if your chosen franchise is really what you want and what you can handle.
• Having a franchise business may have been playing in your mind for months, but be sure that you create a business plan to help you guide through the whole “journey”. This will be needed especially when you need to apply for a loan where the bank may want to see your projections and how else you plan for the business you have in mind.
Benefits of Having a Franchise Business
Having a franchise business may give you several good points which you may consider and further encourage you to choose it over starting up your own.
• Sticking with a well-known brand gives you an edge.
• A franchisor will provide you with a business where you can just start without having to worry on how to start with it. The franchisor should be able to provide you with the necessary knowledge on how to start. It is the franchisee’s responsibility on how to implement the rules based on what is written on the agreement.
• You will not worry about the equipment to be used in the franchise business because these come with the agreed franchising fee. That lessens the franchisee’s worry on where to buy the equipment needed.
• Buying supplies from the franchisor would definitely be less expensive as the franchisor may have been provided with discounted rates which he can pass on to the franchisee.
• When it comes to financing a franchise business, you may have a bigger chance of having this help especially when your franchisor have made good relationships with lenders as these lenders will see it as a brand’s referral to be more favorable than an sole, independent business owner who is just starting out.
• A very well-established brand would not pass on any chances of being known. The franchisor will provide support with regards to marketing and advertising. This, however, would cost a monthly contribution for each franchisee.
• If you have started your own business, your ROI may take about between 5-7 years. But with an established brand, the company’s projection is anytime between 2-3 years.
• Franchisors provide seminars and trainings for franchisees so that they may be fully aware on what to do and what to expect from the business. Franchisors would always want to provide the necessary tools in order to help the business grow.
• Franchisees need not be burdened on coming up with new products/innovations on how to expand the business. Franchisors may come up with these and try them on their own stores and may ask franchisees if they are willing to test them.
• Franchisors have a team that can help provide the best locations possible in putting up the franchise business instead of you worrying and wondering which could be the perfect spot.Just in case a franchisee decides to discontinue the business after the contract, it will be easier for the franchisee to sell it back to the franchisor (as the franchisor may assume business until another individual may want to franchise the business on the said location).
• Choosing to have a business may just be the answer to our struggles nowadays. But be sure which kind of business you want to get into. With having the necessary knowledge and enough financial power, you may just be on your way first step in achieving your dreams.