A franchise is a type of license that a party (known as the franchisee) obtains to grant them access to a business’s (known as the franchisor) know-how, procedures, and rights to sell its branded products and services.
Franchising is a marketing management philosophy that can be adopted by an entity as a strategy for expanding a business and selling products / providing services through certification. The franchisor not only determines the products and services that will be offered to the franchisee but also provides them with an entire operating system and necessary support.
Relatively speaking, consumers do not really care who the owner of the business is, as long as their brand expectations are met. This is why franchising, at its core, is about brand value. A franchisor relies on quality and consistency from the franchisee to deliver these expectations.
Making a weighted decision
Signing the franchise agreement is the first step. The franchisee then has to finance the business, scout out the right location, furnish the location with the necessary equipment and fixtures, buy the necessary products and ingredients, attract employees and offer training, as well as advertise the new business to the neighbourhood. All of this is done in hopes that customers will come through the door.
Fortunately, franchises often have established credibility and brand reputation. So, when it comes to buying a franchise, it may be safe to assume that consumers are already in the market for the specific branded products or services.
For younger individuals, buying a franchise is an inviting opportunity to gain work experience and financial independence. For older or more experienced individuals, it is a great opportunity to excel in their skills and possibly learn enough to start their own business.
There are many reasons as to why someone would consider buying a franchise. Some do it for the money, some do it for power, while others do it for experience or independence. However, when it comes down to it, it is important to understand the business model and to assess the benefits and risks for the purpose of building a strong and profitable business.
Choosing the right type of franchise opportunity
The success of each franchise is independent, taking into account different factors such as location and work ethic – among others. Running a franchise can reap the rewards of an investment, but you need to think before you dive.
Here are 5 things you need to know, or rather 5 questions you should ask yourself:
1. Who – Who am I getting into business with? What is the franchisor like?
2. What – What type of franchise am I looking to buy? Do the benefits outweigh the risks?
3. When – When will the franchise meet short-term and long-term objectives?
4. Where – Where will the financing for owning and operating a franchise come from? What does it take to run a successful franchise?
5. Why – Why am I buying a franchise? Am I capable of being a franchisee?
And of course, there is also the occasional how – how do I plan to get out of the business? (should the situation arise).
The better you understand the answers to these questions, the easier it will be for you to choose the right type of franchise opportunity that meets your vision, goals, and milestones.
To read more on topics like this, check out the business category.