You’ve always wanted to start your own business, but it sounds challenging and intimidating. But haven’t you realize that owning a company does not mean that you have to begin from scratch?
Buying a franchise is a more comfortable option. You can franchise a QSR or quick serving restaurant that provides a relaxed dining experience or a beauty franchise that offers lash services, hair treatment, and nail care. Depending on your budget, you can choose from several franchising options that include new industries to established brands.
With almost unlimited options, choosing the right franchise becomes a tough decision to make. These guidelines will help you make the right choice:
1. Know the types of franchising
There are three significant types of franchising arrangements that you need to understand before buying a franchise.
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Product franchising
This type of franchising gives the franchisee the right to distribute the manufacturer’s products and use their brand name and trademarks. You have to pay fees or purchase a minimum amount of their goods to obtain these rights.
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Manufacturing Franchising
In this arrangement, the franchise company gives the franchisee the right to produce, as well as distribute the product under the franchiser’s name and trademark in a specific area. An excellent example of this franchise agreement are bottlers who purchase rights from soft-drink companies to produce, bottle, and sell their products in a region.
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Business-format franchising
This is the most popular type of franchising today. The franchisor will do the advertising, marketing, planning, production, quality control, and training of staff. You, as the franchisee, will operate under the company’s trade name and follow its business procedures.
This is the ideal type of franchising agreement as you will receive continued assistance from the franchiser company. In return, you will pay the initial franchising fee and on-going royalties.
2. Consider your budget
It is crucial to understand how much will the venture cost to secure continued business operation. Know the cost of purchase, expenses for opening inventory, the amount of working capital, maintenance cost for equipment, and other unexpected costs. No matter how famous the brand is, it will take some time before you start earning a profit. Make sure you have sufficient funds to support your business during its early stages.
3. Satisfy your passion and evaluate skills
While it is true that you will not do the selling or serving, successful entrepreneurs will tell you that passion often translates into a successful business. Owning a franchise also means managing your employees, so strong people skills will make it easy for you to manage your employees and interact with your customers.
4. Avoid the saturated market
It’s easy to fall in love with a good brand, but the presence of several business rivals indicates that you need to choose a different franchise opportunity. If there is a tight competition in your area, there is a high chance that your franchise will not be profitable.
5. Seek feedback
Talk to current franchisees and ask them about how satisfied are they with the franchisor and the industry.
Purchasing a franchise is safer and easier than starting your own business. You have higher chances of success because of the proven business model and recognized brand. With a long list of franchising opportunities, there’s no excuse not to find a good match.
