Franchising is a business concept that has been in the market for more than 50 years and, for the most part, successfully. A franchise is a commercial and legal relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. The simplest form is known as product/trade name franchising: a franchiser owns the right to the name or trademark and sells that right to a franchisee. In the more complex form, a franchiser provide a full range of services, including site selection, training, product supply, marketing plans, and even assistance in obtaining financing.
Now, we will concentrate on this last form. What kind of advantages does it guarantee? The most important advantage is that a franchise lets people experience the freedom of business ownership with the security of operating with a proven business model.
If you have decided to consider a franchise opportunity, probably you have made a right decision, but you have to consider these questions before starting. Five questions that should be on any serious franchise candidate’s list.
How does this franchise work?
It’s the first question. You should discuss with the franchisor about the core business, what the company sells, who are the targeted customers and how they are attracted. You have to understand if this market is able to generate revenue.
What is the competitive advantage of this franchise?
Figure out who the competitors are and what this franchisor does better or differently from other players in the field. You need to determine what makes the franchise’s offerings attractive to a potential owner and prospective customers.
What ongoing support and training is provided?
Find out if the franchisor provide a training, how long the training takes and where it’s provided: online, in a classroom or in the field. What kind of support does he guarantee? Is there any possibility to receive continued support?
Does the franchisor have a system working everywhere?
Find out if there’s consistency throughout the system so that customers in your local market receive the same experience as those in other regions. It’s not a little problem. Often the business works only in a specific area and not everywhere.
What’s the real cost of starting this franchise?
Will you pay something to receive training and to obtain software? Ask about initial fees beyond the franchise fee. It’s important to calculate the amount of investment involved. Find out the up-front charges for opening the business and all financial obligations.
How to explore a franchise opportunity