People nowadays are inclining towards entrepreneurship. Due to this behavioral change, the business sector is creating new ideas and ways of doing business. One of them is to buy a franchise.
If you are reading this article, then you probably want to buy a franchise and look for more information about it. But before we come to the pros and cons and take steps towards which franchises to buy, let me give you a brief understanding of what a franchise means.
What is a Franchise?
The franchise is a type of business model where one or more persons sell the company’s product in a particular region in the name of the company itself. It is kind of a dealership. Potential businessmen acquire a pre-established business model which is operational on every level, starting from manufacturing to production, branding, and marketing, and carry on the business on the company’s behalf. Franchising is a great way of doing a business, but before you spend money on taking one, you should always consider its pros and cons. There are many franchises to buy, but it is very important to choose the right business that matches your personality.
Our guide will provide you with all the relevant information you need to know about franchises. Let’s discuss the pros and cons of Franchises.
Benefits of starting a franchise business:
- Low operational cost
- Business assistance
- Lower risks
- Built-in customer base
- Brand recognition
- Training and technical know-how
- Lower failure rate
Don’t get excited by just knowing the benefits of franchises. Though it is a good business to choose from it comes with lots of drawbacks too.
After going through both pros and cons, if you still want to buy a franchise, then let me take you to the steps of buying one. There are seven steps in franchise ownership.
- Research which franchises to buy
- Submit application
- The Franchise Disclosure Document (FDD)
- Franchise Disclosure Review
- Time to get back to the business
Step 1: Research which franchises to buy
The first and foremost step is to explore different types of franchises that are being carried out. Research franchises business and according to your target industry and then decide which one to buy. There are plenty of options you can choose from. Keep a few things in mind while choosing the industry. You should know whether your personality is more towards creating things or implementing things. This is important because in a franchise you will barely be able to create the product. Secondly, study the industry you are planning to buy a franchise in. And thirdly make a money plan to be sure that your current finances would be enough to take up the expenses of the franchise.
Step 2: Submit the application request
After researching the franchises, narrow down two to three industries such as healthcare, cleaning franchise, fashion industry, etc. Choose your potential companies from each industry and send them application requests to their official websites. Let the company get back to you in a week or so. Wait for the company to send you their final words regarding your application request.
Step 3: The Franchise Disclosure Document
Moving to some technical things, the moment you get a response from the company they will provide you with a document known as the Franchise Disclosure Document(FDD). This is a document that contains the details regarding the industry, the company, its business model, respective roles and duties of the franchisor and the franchisee. This document helps you to briefly understand the franchise model, the companies workings, and the fee and commission structure. The FDD is the legal document that defines the relationship between the Franchisee and the Franchisor. It is a written agreement between both parties regarding the terms and conditions of the franchise.
Step 4: Training
One of the major benefits of owning a franchise is that you don’t have to make the business model. Instead, you get the chance to know the trade secret of the parent company. The parent company has already created the business model according to the market, prepared the product and services. You just need to take training to learn the technique to grow your franchise. During this training step, you will get to know how to carry on the business effectively and efficiently. The Franchisor that is the parent company would provide you with all the relevant details about the training program. They might provide you with in-house training at your location, or you may have to travel to them for training. Some might even assist you with time to time online orientation and telephonic doubt assistance during your franchise period.
Step 5: Franchise Disclosure Review
We are almost at the end of the setting up process of the franchise. During the review process, you and your franchisor will get a detailed interview regarding the discussion of the terms and conditions of the franchise. Together you will review the FDD and discuss the relevant terms and duties. This is your opportunity to go through the FDD ask any questions that you might find difficult to understand during the reading of the document.
Step 6: Time to get back to the business
If you have reached this step, then you are very near to establishing your franchise business. This is the final step where the franchisee and the franchisor sign the Franchise Agreement and mutually set up the relationship to start the business. Here the franchisee meets key executives who will work closely as a Franchisee. Now it’s time to get back to the business!
This is the whole process of setting up a franchise business. It is no less than establishing the main business. Decide wisely as it is not an easy job. https://www.franchiseresales.com/ is the great website if you are looking to sell or buy a franchise. They will guide you in every step to make the entire process easy.