Franchising is a common business model that involves the franchiser, the owner of a brand name, service mark, trademark, trade name or symbol, and a franchisee. The franchise holder grants rights to the franchisee to use the owner’s identification at a fee and on a condition that the franchise promises to adhere to the franchise holder’s guidelines. Before you engage yourself in business franchising, consider the following top tips in business franchising:
Choose the Best Franchise for You
Before you consider a franchise opportunity, consider your own strengths, weaknesses and interest. This is to ensure that there is a good match between you and the franchise being considered. For instance, in case you do not like searching for customers and cannot afford to hire a salesperson, consider getting a franchiser that provides you with potential leads. Also, don’t believe all the earning claims given by a franchiser except if you are provided with satisfactory written proof of the claims.
Prepare a conservative expenditure budget and sales forecast in order to determine the breakeven point for your business and ensure you have the financial resources associated with the start-up. Ask your accountant to evaluate your information and give feedback.
Evaluate the Pros and Cons of Franchising
The advantages include running an already established business, getting technical and operational help from the franchiser, a lower requirement for operating the funds as compared to most non-franchise businesses. The drawbacks include extra cost such as the franchise fee and, in the case of certain franchises; being constrained by the franchiser’s operating guidelines. For instance, if a restaurant franchisee wants to add other items to the menu, he or she may be constrained from doing that.
Business franchising is very difficult and is always accompanied by certain risks. In the end, the decision is yours to make and hopefully the above tips will help you make the right decision.