How to Open a Franchise Business

Franchise Business

Franchising denotes staring a business using an already established idea. A franchisor usually allows the franchisee to sell the products, services and techniques in return for a percentage in sales and royalty fee. The agreements signed between the franchisor and franchisee can last anywhere between five and twenty years.

Starting a franchise has both advantages and disadvantages, both for the franchisor and franchisee. Some pros for the franchisor are expansion of his business in different places, relief from the formalities required to start a new outlet in a new place, more dedication from the franchisees than the direct employees to make their franchise a success. In the mean time franchisees can look forward to starting their own business with a quick start, opening other franchises and also training from the franchisor which is otherwise not available.

The disadvantages for the franchisor could include incompetent franchisees which can lead to damage in the public’s goodwill towards the brand if not carefully monitored.

Tips to open a franchise

For the franchisee some cons could be loss of control in various aspects related to the franchise ,the expense involved and lack of permission to purchase less expensive alternatives, lack of guarantee in the success of the franchise as well as there are chances of conflict between the franchisor and franchisee if there is incompetency from either side.

Below are some points which you must remember before deciding to open a franchise:

  • Decide on the investment capital that you can commit to open up a franchise.
  • Think seriously about the location of your franchise. You must ensure that opening a particular franchise in a particular area will boost up your business.
  • Decide on the number of people you would want to employ. Also decide in advance the working hours and the number of working days in a week.
  • Set a particular target amount that you would want to earn from your franchise.
  • You have to have a clear idea of the likely competition which you might face after starting the outlet.
  • You have to have a clear idea of the franchisor’s background and their reputation.
  • Have a marketing plan such as direct mail initiatives, sales brochure, visual advertisements etc.

Franchising will provide independence to the owner as he can control his own franchise up to an extent without the risks involved in starting a new business altogether. It provides established brand awareness, uniformity and reliability, for example if you enter into a franchise of subway, you know for sure you will get the same quality of sandwich as of the original outlet.

Franchisees can avail themselves of the economies of scale offered by the franchisor i.e. they can purchase the goods and other supplies from the franchisor at a discounted rate. There are a number of ways where you can research about a franchise possibility, that is online, or through associations, franchise consultants etc.

Finally your franchise can become successful and earn a considerable profit if you have a strong management in place.

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Comments 2 comments

businesstrader profile image

businesstrader 6 years ago from Sydney, Australia

Investing in a franchise is usually a safer option than starting a business from scratch. This should be kept in mind when you are considering being your own boss!

Kevin Peter profile image

Kevin Peter 3 years ago from Global Citizen Author

Hi businesstrader,

What you wrote is absolutely right. This is the safest option.

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