Before investing in a franchise business, here are 8 factors that you need to consider to make it a good decision for you.
Recently, I was sitting with one of my friends at a well known coffee house and he suddenly asked me, “If I want to take franchisee of same brand for myself what I need to know before approaching the brand.” He continued, I have always wanted to enter in this business but always found the shortage of funds as every international brand asked me for a huge investment. But this is home grown brand and has expanded very fast with the opening of new franchise outlets in different cities. He continued, “How hard it could be? Is it good idea to take franchise than starting my own business?”
Well, my friend is not the only one who is thinking about starting a franchise business, there are many others too who are impressed with the growth of franchise industry and already are in search of franchise options in areas like QSR, real estate, food retail, automotive, commercial services, personal services and in many other areas. No doubt there are advantages of opening a franchise, but still, a franchise business model is not a guaranteed success for everyone. To ensure success, you need to do it with due diligence. To understand the challenges of starting a franchise business, read below the shared information to be aware of the franchise opportunity.
You can start with any franchise business that has demand in the market. Buying a restaurant franchise specialized in a particular niche could be a good idea but you should be in a right market segment. This goes same for idea of buying a franchise of trustworthy accessories and clothes brands in a specific niche with loyal customers. To check the reputation of the brand, you can check its track record and market response it has received in the existing markets.
- Involved Cost
Cost is another main concern. You need to know this thing beforehand as it is a crucial factor to get and run our franchise business successfully. The cost part also includes – product purchase, inventory management and the working capital. These are a few expenses that you need to pay before you break even. Plus, you should also know all about the finances involved in the business.
- Passion for Business
Success of a business depends upon how passionately you do the business. For example- you don’t like fast food items but you own a fast food outlet because you just want to be in this business. This cannot be a great business for long run because you will hire people to make the business operational but if you are not passionate for it, can lead to a worse mistake.
- FranchiseTerms and Conditions
Devote as much as possible time to get to know all about the brand, owner, business operations and everything else that is related to franchise business and franchisor. Not all brands are same, some have grown quickly and some have taken long time to be a successful and trustworthy name in the market. Do your extensive research to know the history of brand and its average rate of success of its franchisees as well.
- Success Factors
What are key factors that can be helpful to make your franchise business idea successful? What are challenges that can stop you be a success franchisee? Like these, there are many other questions that you can ask existing franchisees including failed ones too to understand all about the chosen franchise business.
- Support Provided by Franchise Owner
Next factor is franchisor support! Unlike starting own business or brand, in franchise business, the support provided by the franchisor offers great comfort for newbie. When you buy a franchise business, franchisor typically provides financial assistance, location selection help, operations training, marketing support, supply chain and more just to make the franchisee comfortable for doing business. However, you need to make sure that how much support your franchisor will provide you before proceeding ahead. You can also talk to existing franchisees to know that how much assistance the franchisor has provided them when things were going against or wrong for business.
- Analyze Earnings Potential
It could be little tricky to know the profitability of franchise business as it is affected by a number of factors. However, you can talk to other franchisees to evaluate the figures and investigate what factors are important to become profitable. Also note down the challenges which became the reason for failure of other franchisees.
- Plan Your End Game
Before you decide if this franchise business is right for you, define your short and long term business goals. There are a number of different ways to exit a business. Going ahead with a well-defined business plan increases the chances of success. If you plan your end game beforehand, it will help you define your business strategies and priorities too.
Best Franchise To Own in India
Without doubt, buying a franchise could be a great biz opportunity, but note down the answers for all the above shared points with what is your plan to get out of it for guaranteed success!