There are two ways of establishing a business. Either you can build your empire or you can buy a franchisee. Both of the ways have gained attention from the entrepreneurs and both are very popular too. Building an all-new business on your own is a pretty big task. Therefore those people who don’t want to create a new business from scratch generally go for the franchise option. In typical words, franchisees acquire a business model which is operational on every level, starting from manufacturing to production, branding, and marketing.
The franchise has its benefits like a person who is already the customer of the brand would always prefer the brand irrespective of the fact that who operates it. For instance, McDonald’s has a wide well-established customer base so people would always prefer Mcdonald’s over anything new, even if the product is better than that of Mcdonald’s.
But making a franchisee successful is also not a cakewalk. The work doesn’t restrict to just finding a good brand and opening a store; it is a lot more complicated than it looks.
If you’re thinking of becoming a franchisee, how should you proceed? How to choose the right brand? How to decide which industry you would like to pick? To give the answers to all your questions, we have broad down everything you should know before buying a franchise in 8 points.
Your personality will decide your industry
A franchisee is not a business to create things but a business where you have to play the role of an implementer. If you are a creative person and like to bake, then taking the franchisee of a bakery might not be the best option for you. You won’t be able to use your creativity in any way. As a franchisee, you need to follow the rules of the business and operate within the established business system. Therefore do a quick scan of your personality and decide whether you are more into creating things or following and implementing.
Study the industry
Before signing up yourself for the franchisee business, study the industry you intend to buy a franchisee in thoroughly. Or even when you are starting a startup you want to come up with the best startup names. At times we think that a certain business could be profitable, but you should be practical, statistical, and also predictable about the future of the business. Just because the business is doing well in the present doesn’t mean that it will continue to bring you mangoes in the future. Study the roadmap of the business, the internal functioning, and the management relations with its clients. Every small thing matters in making a business successful.
Focus on your strengths
Many people enter a business they don’t like doing but continue to do it as it is profitable. This is one of the major mistakes we are committing. Even if the business looks profitable at the moment, if you do not show interest it cannot grow further. It will become stagnant and eventually it will start incurring losses. Therefore you should evaluate how well your personality matches the business you are opting for.
Make a budget
Even to buy a franchisee, you have to incur a lot of money. The listing fee, cost of equipment, cost of the location involves heavy marketing and operational expenses. Before your business catches on, you have to incur numerous expenses to establish it at a good scale. For this, it is very important that you make a detailed budget and before opting for the business estimate the future business expenses and decide accordingly keeping es and decide accordingly keeping our financial resources in mind. You should make a financial model and have sufficient capital which can be enough to survive the business for a year covering all the business and marketing expenses.
Franchisees fail as much as businesses
It is wrong that people claim that businesses fail twice as many franchisees. Well, the actual truth is that there is no sure-shot success mantra of the franchisee. Both fail at roughly the same rate. So if you are also the one having the opinion that franchisees would be more profitable than business then let me tell you, you are on the wrong page. So do not choose the franchisee option based on the success and failure ratio but the basis of the above-listed points.
B-negative
Never focus on the positive sides of a thing before making a wise decision. Always dig for the dirt also. You can never make a wise decision if you don’t know the cons and just focus on the pro. Google the history and performance of the business and search for negatives about the franchise you’re considering. No business is perfect and thus it is equally important to access the negative areas and evaluate the decision considering both.
Explore different franchisees
Many platforms provide you with the names and the contact of the current franchisees and ask about the reality of the business. Talk to at least 5 of them and ask about the advantages and disadvantages and the extra unknown costs. Ask them what they learn from experiencing the business which they did not know when they initially started it. Ask them all the questions which can put you in doubt and listen to them properly because these are the people who are already in the business and might become your future competitors.
Ask for a professional
If you have a commerce background and you know how to read balance sheets and maintain books of accounts then you might not need an accountant. But you can’t be a master of all the fields. When you incorporate a business, many legal formalities are there which need to be performed for which you need a legal hand. It is always a good option to delegate the professional work up to the professionals and focus your efforts on the growth of the business. Having a professional in a team can benefit you in many ways like you will always have expert advice in making crucial decisions for the business.
Before you buy a franchisee go through these tips thoroughly and make a wise decision whether you are a franchisee person or a creator entrepreneur.