What is Franchising? The franchise is a strictly business operation where the two parties involved in it, allow each other to sell their goods, products and the concerned properties. For instance, large eateries like KFC and McDonald’s function in different countries through different franchises.
Franchising, by definition, occurs when the master of the franchise grants the other two parties a licence and allows them to function with the same trade names, trademarks, and other distinguished aspects of the particular business.
The franchising market in India is expected to develop at a CAGR of 24 percent to Rs 10,500 billion by 2022.
Franchising may seem like an excellent idea for a striving entrepreneur, who is not looking to start their business from scrap. But before buying a franchise, there are a few things that a buyer should keep in mind for a successful venture ahead.
1. Are you really ready for the franchise?
This should be the first question that might pop up in your mind when you are thinking of buying a franchise. Well, let’s be honest, owning a franchise is not child’s play. You have to invest all your time and attention into this business operation, and once you are in, there will be a drastic change in life.
This might give you the thought that you are living your dreams but if you lack passion and dedication, this entire franchise operation will turn out to be your worst nightmare because passion is the driving force for success.
Therefore, take your own sweet time and give it a thought whether you are really ready for this huge change.
2. Acquire knowledge and then proceed
This is the most obvious point you would want to consider. Whenever you’re dealing with something that will bring a huge change in your life, you should have full knowledge about it. The same thing is with franchises.
Before you say yes to buying a franchise, ensure that you know everything related to the particular business and that you are okay with it. Research about other franchise owners, learn about their perspectives and then say your final decision.
You should have good knowledge about the products you are buying or will sell in your franchise. Otherwise, if you start a franchise with half-hearted knowledge, you’re bound to face problems down the lane.
Therefore, make sure that you are aware of everything about the franchise and its features and attributes.
3. Make sure that the franchise operation is within your budget
This point might appear uninteresting and bland, but it is a really important aspect you would want to consider while buying a franchise. There’s a very popular misconception that franchising is synonymous with minting money. That is not the case at all.
Before you buy a franchise, you should have at least 6 months’ savings ready with you in a trust fund or other emergency contingencies.
It’s very crucial for you to devise a proper and well-planned business strategy so that you can avoid unnecessary shocks and surprises in the way.
Avoid focusing just on the money coming in, but also keep a keen eye on the spending, including the amounts related to electricity, water supply, land taxes and so on.
4. Look out for some possibility of renovations
Franchises generally do not offer the freedom of introducing something new to the buyers. But it has been observed that franchise owners have introduced certain things that would increase the sales in a particular region.
For example, KFC in India introduced the KFC Biryani bucket which is only available in India, and that caused the sales to experience a meteoric rise.
If you’re looking for the freedom to innovate, then look for franchises that will allow you to do so. This will also help you analyse your control over the whole thing when you’re running the franchise.
5. Take opinions from other franchisees
Prior to taking any decisions regarding your franchise, try talking to some fellow franchisees who have been through the same process. They can actually help you get a better insight into the functioning of a franchise and its attributes.
Take a moment and learn from their perspectives, their ideas, experiences and see if any of that is applicable in your case. If you want some quality, professional advice, get in touch with McMahon Fearnly Lawyers. They will help you get acquainted with all the legal documents and receipts.
Over to you…
Before you go off and sign the franchise deal, keep these above-mentioned points in mind. These pointers will help you be successful in your new business operation.