Many people dream about becoming their own boss. If you feel like that being a business owner would be something you’d be great at, then you basically have two choices in front of you. You can either choose to build a business from ground up or you can buy an existing franchise. Keep in mind that purchasing a franchise is the less risky option, since you won’t have to worry about coming up with a business plan or developing brand name recognition.
Although the franchisor is usually responsible mostly for the marketing and advertising, the success of the business will still be up to you. Your success will largely depend on the franchise you purchase, so make sure to research it well before you buy it.
Study the Franchise Business Model
Before you actually begin the process of acquiring a franchise, it’s important that you learn as much information as possible on how to do it properly. Understand that once you pay a franchise fee, you will get the right to use the franchisor’s name and you’ll receive a system or format that was developed by the business. The franchisor will also offer you some assistance like initial training and advice on marketing and management. You’re probably going to get an operating manual as well.
Keep in mind that owning a franchise will come with some costs. First of all, you will have to pay the initial franchise fee, which can be up to several hundred thousand dollars. In some cases, this fee is non-refundable. You’ll also be required to make continuing royalty payments based on your income on a weekly or monthly basis. Apart from that, you will have to rent, build, and equip an outlet. If you’re still not familiar of everything that comes with owning a franchise, you can check out the Consumer’s Guide to Buying a Franchise published by the Federal Trade Commission.
Consider the Location
The location of your business will have a huge effect on the number of customers you get on a daily basis. Before you buy the franchise you’re looking at, it’s important that you understand your target demographic and determine which location is good. Some of the details that you’ll need to consider include parking, traffic patterns, as well as nearby stores. It’s also crucial that you check whether you are going to be guaranteed protected territory. This will ensure that other franchises can’t open within a certain radius.
Do Proper Market Research
In order to have a successful franchise, you will need to dedicate a lot of your time toward market research and competitive analysis. This will allow you to learn what you can do to further define the place of your franchise in the market. On top of that, you’ll be able to come up with different strategies on how to rise above your competitors. By completely understanding the market and knowing your competitors as well as the strategies they employ, you’ll be able to have a very successful business.
See What the Customer Experience Is Like
By purchasing a franchise, you will have a proven business model that you know is going to attract customers. Nevertheless, since you’ll become the owner, you’ll have the power to improve the business and bring in even more customers on a regular basis. The best way for you to see the current flaws in the business is to analyze what the customer experience is like. If you notice that your current staff is not friendly enough, make sure to hire some new workers.
Consult an Expert
By consulting an attorney who specializes in franchise law, you’ll be able to gain more insight on the franchise you plan on acquiring. Your attorney will not only review the franchise agreement documents, but he or she will also point out any potential red flags.