Franchising has a higher success rate when compared to opening a new business, statistics show. In fact, over 95% of franchise owners have stayed in business after five years since they’ve started.
With these numbers, it’s undeniably tempting to start your own franchise. But where or how do you start? Here’s a guide on what you need to know regardless if you’re looking at food, retail, or automotive franchise opportunities.
Advantages of Franchising
Starting with a Guide
One of the biggest benefits of franchising is skipping the process of trial and error. You won’t need to fumble or figure things out as much since the franchisor has already gone through it and will assist you along the way.
They may not provide everything when it comes to operating the business, but it’s definitely much easier than starting from scratch. Having this knowledge will also decrease your chances of failing.
Apart from business operations, the franchisor will help you with other relevant things, including equipment, supplies, marketing strategies, and possibly even network connections.
Having Brand Recognition
Gaining trust from customers is always a challenge when you’re a new company. It takes a long time to cultivate and even more effort.
However, when you’re franchising, you can be confident that the business is already known and has a customer base. This makes it easier for you as a franchisee since people will already know what you offer and what to expect when doing business with you.
Being Your Own Boss
When you’re the boss of your business, you have more control over your time, which is probably one of the biggest assets today. You get to decide your schedule and have agency over your career.
With franchising, you have the added benefit of receiving support and knowledge from the franchisor. It also means that you get to run your own business while avoiding the risks of starting one.
Things You Need to Consider Before Franchising
Before diving into franchising, there are many things to plan and look into. If this is your first time, then you may not know the right questions to ask.
Costs
First and foremost, you need to know how much you’ll be investing to kickstart your franchise. Things you need to factor in include:
- Costs of purchases
- Opening inventory
- How much you need to break even
When you understand these costs, you can make smarter decisions. Sometimes, people even realize that they can afford big franchises when they take the time to analyze costs.
Attitude and Compatibility
There is a common misconception that if you like coffee, you’d automatically be good at running a coffee business or franchise. This isn’t necessarily true.
It’s important to note that when you run a business, you won’t be doing all the work. In reality, you’ll be hiring the right people to do so.
On top of that, when you’re franchising, you’ll be following and implementing someone else’s system. Depending on the business, they may have control over:
- Store location
- Store decoration
- Operating hours and holidays
- Products and pricing
- Advertising and marketing
These rules were put in place to make sure that the brand and all other franchises are standard. They can be liberating or incredibly restricting.
So before you start franchising a business, you need to ask if you’re suitable for the business you’re interested in.
Research
It would be wise to learn everything you can about the franchisor before making things final. Check the number of years they’ve been in business, current and past franchisees’ success rate, and how long they usually last.
You should also approach other franchisees and ask them about their experience through questions like:
- What are the keys to staying and thriving in business?
- How long did it take before they were able to profit?
- What were the challenges they faced along the way, and how did they overcome them?
When you’re making your decision, know that you shouldn’t take a business off the table just because they’re new. You also need to factor in their potential.
Your Goal
Begin with the end in mind. What are you trying to accomplish with franchising a business? Do you want to run it for a few years and then get out? Is it something that you want your children to inherit?
When you know what you want to happen, you have an easier time knowing what industry you want to be in, what business to franchise, and how you will be running things.
