Opening a franchise is a good option for those who wish to venture into a business and aren't too comfortable starting from scratch. With franchising, they get to earn higher returns, especially when compared to the investments made. Indeed, this makes franchising an attractive option to break away and begin a business.
The biggest advantage with franchising is that you get a head start, assuming that you're associated with an established brand. You won't have to necessarily struggle to find customers during your initial run as the brand's goodwill takes care of that. Further, and more importantly, you get the opportunity to learn about the nitty-gritty of running a successful business.
Opening a franchise requires a thorough knowledge of its working mechanism. There are several things you need to look at before you enter into this venture. This ready reckoner should come in handy.
Before You Own a Franchise
To begin with, you need to think about the kind of business you wish to enter into - it could range from apparel to restaurants or even automobiles. Every franchise has its own requirements regarding finance, style of functioning, space availability, and profit sharing. Studying the complete business model would help you understand its functioning, and gain an inner perspective.
• The very first thing you need to look into is the legal and financial aspects of starting a franchise. This is to ensure that you are prepared to shoulder the responsibility of the enterprise that you are embarking upon.
• Does the franchise require specific expertise? Even though the parent company provides assistance with the setup, once that's done, you are pretty much on your own. Therefore, you'd rather not get into a business that you don't have an inkling of, or requires specialized knowledge.
• Know the kind of business you want to open; research about what is expected of you and what the parent company will provide.
• Here, conducting a market survey will give you an understanding of the market mechanisms, in order to make the right choice in choosing the kind of business to open. Know your competitors and plan your strategy accordingly.
• Be aware of the infrastructural demands - the business could be a fast food outlet, a salon, a pet store, a supermarket, or even an apparel store.
• Get all your queries resolved. Do not leave caution to the wind, and read through the fine print on what you need to come up with. Make sure you've made a note of every minor detail.
• Make a thorough study of the operations. Consider how many hours you need to put in, the exact operational costs you will incur, profit-sharing ratios, duration of the contract, royalty payments, among other things before you sign on the dotted line.
• You could also consider getting into a partnership, as it would help you even out the responsibilities and risks, as well as provide assistance in managing the business.
• Get a feel of the real deal. Visit a functional and running branch and understand the working. This way, you will get an insight from a person who is already doing what you are about to begin.
• Address your legal concerns. The laws regarding setting up a franchise and running it can be complicated. Before you put your signature on any contract, understand the complete meaning of what you're getting into. It would be advisable to talk to a lawyer specializing in franchising to ensure if everything is in place.
Opening a Franchise
After having completed your research regarding the kind of business you're looking to start and all its rules and regulations, you must prepare to formally begin the procedure to become a franchise owner. Assuming you've thoroughly studied the working and the requirements of the business, here are the steps you need to follow -
• Foremost, you should be ready with the capital and infrastructure required to meet the needs of the franchiser. You'd be expected to bear the costs of the renting/buying space, furnishing/decorating, equipment, advertising, sponsoring the opening, overheads, etc.
• Complete all the formalities included in the contract and make sure you have it covered till the last detail before you proceed to sign it.
• Begin the procedure to hire personnel as per your requirements.
• If your parent company is offering any training sessions, do not miss out on them, as they will contribute to your understanding of the business.
• Prepare your store/venue as required by the parent company. Order any decor items or equipment that you would need.
• Begin creating a buzz around your outlet. Discuss the advertising options with your company and start executing them.
• Plan the opening of your store, and ensure that you've built enough anticipation around it.
• Send out invites for the opening. If you're into retail, try to gather some press coverage around the event.
Venturing into a business requires tons of patience and tenacity. This should be accompanied by a sharp business acumen and a will to work hard. It isn't too different when you begin a franchise outlet. Very soon, you will start to reap the rewards of your work.