Popular articles:

3 Important Points to Consider Before Taking a Franchise

When it comes to start a small business, people find franchise opportunity as one of the easiest and most lucrative option they can start with. But franchise business is not for everyone. Its not always guaranteed that if someone is successful in taking a franchise, you will be that successful in buying the same franchise.

If you plan to start your own business by taking a franchise then there are many points you need to consider before taking the franchise which will give the idea whether you will be able to run this franchise business successfully.

3 Important points before taking the franchise

Just focus on all these 3 important points & then decide whether a particular franchise can meet all your expectations.

Knowledge about the product

Although the franchise business is well established & their brand is popular enough to drive you customers but if you don’t have much knowledge about their products, its difficult for you to grow your business. You have to dully depend on your franchisor to promote your business. There won’t be any room for you to grow your own business because of lack of your knowledge.

So if you are interested in a particular franchise, the first step to know everything related to the products. You need to develop your interest in the product. You must know about the demand of this product in your area where you take the franchise, quality of the product your franchisor provide & if there is any competitor & what quality & price your competitor offer.

Cost to start the business

Obviously the cost will be higher in starting a franchise business as compared to that if you would start the business on your own. Franchisor have already invested lots of money in establishing the brand & now they have a proven business model. You have low risk of failure in franchise model.

Here are some of the expenses you have to pay to setup your franchise business

  • refundable / non-refundable franchise fee.
  • expenses towards taking a commercial place on rent & then for its interior.
  • buying stock from the franchisor
  • hiring the staff
  • monthly royalty to the franchisor
  • and many other expenses that are inevitable

So after doing your complete homework towards the expenses, you have to find out how you are going to manage this cost.

  • Does this budget suit you?
  • If yes, then which are the sources of finding the investment?
  • Are you going to take the business loan or you will invest on your own money?
  • If you need a loan then then are you eligible for that? How much will be the EMI?

Consider every factor that can affect your future & evaluate the chances of success or failure.

Know everything about your franchisor

This is the most important point to consider before taking any franchise. There are many things that you need to know about your franchisor which will be useful to decide your success in the business.

  • How old is your franchisor’s business?
  • How popular is the brand?
  • How demanding is his product?
  • Is your franchisor financially stable?
  • What is his plan to grow his overall business & specially your business?
  • How franchisor makes money? How much is the royalty payment & how much profit you make from his business?
  • Who are the failure franchisees and what was the reason of their failure?
  • Whether he is going to allocate another franchise in your area or you will be sole franchisee?
  • Read all the terms of use in the franchise agreement.

Even after doing all the exercise, you can’t be 100% sure for the success. There is no business without any risk. Only thing you can do is minimize the risk.

About the Author: This article is contributed by Priya N who writes about similar business ideas like franchise business, make money, online business etc. To find more, you can visit her blog.

What is Franchise Note?

Franchise Note is a franchise business blog containing franchise and franchising resources - Franchise information, franchising tips, franchise reviews, and many other franchise-related topics. Learn more »

Any feedback? Please send yours to us »

Leave a Reply

Search Franchise Note
FREE Franchising Guide
franchising guide

Sign up to get "Franchising Secrets" ebook for free:



NB: We hate spams and shall respect your privacy
Get Weekly Updates
 Sign-Up To Our Free Newsletter!  
Franchise Weekly Note
 
Featured
Categories
Archives
Franchising News