Opting for a franchise refers to acquiring the license to operate the franchisor’s business system and use its trademark while adhering to a mutually acknowledged agreement. To win the right to operate business under franchisor’s trademark and model, the franchise owner has to pay an initial fee to the franchisor.
Franchise owners get comprehensive support from the franchisors, usually in terms of site selection, staff recruitment and training. Franchisors also extend support in concept development, onsite maintenance of equipment and technical support. It is however, imperative for a prospective franchise owner to ascertain a few facts before lapping up business franchise opportunities. Listed below are some of the quick points worth considering for an aspiring franchise owner:
Business demand for franchisor’s product/service
Before giving your dreams the final shape, consider:
- What is the brand reputation?
- Whether there is a strong consumer base for the service/product and what prospect the service/product holds in future?
- What’s the kind of competition the service/product can possibly face? Are there chances of competitors emerging in near future?
- Are the products/ services one-of-a-kind?
Track record of the franchisor’s brand
The franchise owner should be aware of the brand reputation and gather info about:
- Franchisor’s business record and reputation
- Franchisor’s infrastructure; whether it’s stable
- Legal checks of the franchisor
Before signing on the dotted line, an aspiring franchise owner should consider these aspects:
- Reviewing of the agreement with an independent lawyer specialising in franchise law.
- Uncertainly in any of the points mentioned in the agreement papers
- The terms of agreement fairly meeting your expectations?
The financial strength of the franchisor
It is important to know a bit about the financial strength of the franchisor. Take into account the following factors:
- Is the franchisor financially stable?
- What is the feedback of the other franchise owners about the franchisor?
This is the one of the most important aspects in the entire list. The franchisor must have a fair idea knowledge about:
- What is the amount payable?
- What are the things that franchise fee cover?
Franchisor’s plans of expansion
Being informed about this specific point will bring in a bit of transparency to the prospect of any aspiring franchise business owner:
- What’s the franchisors holds any plan for expansion?
- What are the target markets for growth?
- What is the target sector for future expansion?
Support and Assistance
As discussed earlier, most of the franchisors lend comprehensive support to its franchisees. It is however necessary to be aware of the kind of assistance that franchisor will provide. A franchise owner should check out –
- Whether assistance is rendered in selecting the store location
- Whether the franchisor will play a part in staff appointment and training?
- Will the franchisor handle onsite maintenance of equipment and technical support?
Some of the other information that should be sought include-
- The exact profile of people the franchisor is seeking
- Any distinct age limit or educational qualification
Owning a franchise is one of the best ways to fulfill the entrepreneurial dream. There is more to just conducting basic research before plunging on to the decision of investing in a new franchise business model, which otherwise is considered lucrative.