Look Before You Leap
Before investing hard earned resources in acquiring a franchise unit, it is necessary for the entrepreneurs to calmly evaluate various aspects of the business like detailed set up cost, royalty, a good assessment of business turnover, ongoing encumbrances, etc. A well thought of decision will give you confidence and commitment to make success of your franchise.
Budget everything : First and foremost, you need to have a budget. Having a set budget will enable you to think of how much money you can actually spend on your franchise. It is best to be in touch with the reality here since buying a franchise, as compared to starting a small business from scratch, can be costlier as well as loss making or ungainly if its business proposition is not analysed. So you need to be fully aware of what you are putting your money into, and it is truly worth every penny spent.
Choose wisely : This brings us to the next important thing that you need to consider when buying a franchise: the countless franchise opportunities out there. Keep in mind that the rate of franchise business success is lot better than that for new small start ups. Look for franchise opportunities that are considered hot.
Still you have to think twice (or may be a thousand times) before buying a franchise. Not only the ones that are deemed hot but any franchise under consideration. One season their products may be making brisk business and are considered hot commodity, but how about the next season or the year end? Are they still hot? Are they still selling? Some franchise opportunities unfortunately fall flat once the market is saturated with their products.
Understand the business : When it comes to finally committing to buying a franchise, the franchisee must fully know and understand the policies of the franchise opportunity under consideration. The franchise agreement for example, should always be understood well by the franchisee before signing it. Coaxing from the company or placatory verbal word play is something that companies use on new entrepreneurs just to make them see thing their way, which is why when it comes to buying a franchise, entrepreneurs must always proceed with caution.
A good franchise opportunity should be able to provide the franchisee with various benefits and services from the moment he or she signs the agreement. Such benefits include training, marketing and other support services from the franchisor. Franchisors who do not comply with such services should be seen with circumspection as they may be trying to make some extra profit from the franchisee or may not be sincere to the business.
Before signing the dotted line, consider the following :
Proper Training – Most franchisors will actually offer to help your small business establish, run and expand to get some added leverage. Buying a franchise clearly has its perks: it gives new entrepreneurs an opportunity to learn the ropes from established businesses.
Proven Products and Methods – When it comes to choosing a franchise, it is very important that you take not of the ones that are really in-demand or are seasonal. You must have your own conviction and confidence that the products or services will sell because it has a proven market.
Fees — Franchises are perceived to be expensive as franchisees are to make regular payment towards royalty fees besides the initial cost.
Loss of Independence – In franchise business, it is the franchisor’s rules and regulations that are followed in everyday business upkeep. Franchisees should be able to adhere to the company’s good image and quality of products and services