Franchising Success
Choosing
a franchise
The business of
buying a franchise attracts many ambitious entrepreneurs who
are looking to start their own business. The financial rewards
and the relative independence of being a franchisee attract the
ambitious. The prospects are indeed good if the brand being franchised
is a popular one. But then franchise decisions are not based
only on how popular the brand is or or how good is the business
strategy. It involves evaluating the proposition – weighing
the profit potential against the risks. More than that, it is
necessary to evaluate one’s own capability before embarking
on the franchise business, especially if you are a first-timer.
If it’s the first time you’re
considering this business, then you must know what franchising
is. It’s a service distribution which is bonded by a
contract.
Example: A famous fast-food chain has advertised interest to
open franchise in your particular area.
The franchisee would be bound in a partnership agreement for a
defined period of time.
The process of self evaluation must be objective and realistic.
Your enthusiasm must match your capabilities and resources. The
process must enable you, the prospective franchisee, to decide
what sort of franchise would be best suited to you, after considering
the following factors:
•
The things you like doing– manual work, selling, meeting
and interacting with new people, organizing things, etc.
•
Family support – does your family feel as enthusiastic
about the business idea
• Can you put all your financial eggs in one basket
• Can you manage the high stress levels which go with self employment
Next you must weigh the pros and cons of the franchise business.
The pros are:
•
training – even if you are not familiar with the business
model, chances are you would be provided training to run
the business
•
more chances of success if it’s a tried and tested
business model.
• continuous back-up and support from the franchisor
• The advantages of being part of a larger organization, such as
bulk purchasing and pooled resources. Next,
you would be best advised to do some investigation about the
franchisor – about how long they have been in business;
what is their reputation among the suppliers, and customers.
If they haven’t been around for very long, then you
need to check their track record and verify their credentials. Watch out for:
* Pyramid Selling schemes i.e. where the selling participation
right is more profitable than selling the end products or services
if indeed there are any; stay away from such schemes
* Heavy initial fees and low or non-existent continuing fees
* a contract which does not match the promises;
* a hard sell;
* get rich quick offers;
* unhappy existing franchisees in the system.
A fair evaluation of both your capabilities and the prospects
on offer, should you’re your enthusiasm intact for
the business as there would indeed be many good opportunities.
Examples: Fast-food franchises, restaurant chains, coffee
bars,
sandwich bar franchises, ice cream parlours, health and
beauty franchises, internet café franchises,
grocery, branded clothing, leisure franchises, travel agencies,
placement companies, etc. If what you seek isn’t in
this list, then look around you will find something that
matches
your requirement. |
