Considerations of A Franchise

An entrepreneur has a variety of ways of starting a venture.
Franchising is a rewarding path to

business ownership, financial independence and freedom. It offers a variety of benefits due to its
nature of having tried, tested and proven products or services. As an investor, you need in-depth
research before choosing a franchise that will give you the financial freedom and success you desire.
The article will highlight factors you need to consider while choosing a franchise.
What is a franchise?
It is a contractual agreement between a franchisor and a franchisee. A franchisor is an established

business owner who gives rights or licenses to a franchisee to use their name or idea to sell products
or services at a fee. The franchising industry continues to grow with opportunities in every industry.
How can you leverage this business model? Below are some of the factors you need to consider
while choosing a franchise:
Passion and knowledge of the industry
A franchise is a long term commitment and choosing an industry you are well conversant with is vital
for your success. If you have no prior experience in the sector, choose a product or service that you
are passionate about. As a franchisee evaluate your abilities, interests and needs in the enterprise to
determine if they match with your aspirations and goals in life.
Cost of the franchise
The franchise fee is the one-time amount that you pay a franchisor for the use of the brand. You will
also incur building and construction costs, equipment purchases and material outsourcing costs.
Calculate the investment cost and weigh it against your expected returns. You should note that
sometimes a business may take a year before you realize any profits. . It is therefore wise to have
access to capital that covers business expenses and personal expenses of up to one year.
An investor should be aware of other costs payable to the franchisor after establishing the franchise.
The royalty fee is one of the fees that every franchisee pays to support, maintain and grow the
franchise system. Enquire from a prospective franchisor the rate and duration of these recurring
costs.
Review the franchisor
As an investor, capitalize on a successful business by performing due diligence before signing any
contract. Get to know how reliable and credible a brand is by checking its history. Consider checking
online reviews and feedback to perceive the enterprises business practice and its sustainability.
Investigate the integrity of the franchisor and the presence of any litigation against the company or
its executives. Such information will guide you into knowing the imminent failure or success of a
franchise.
Talk with many current owners and ex-owners of a franchisee and ask questions about the level of
support and the quality of training that the franchisor offers. Enquire on how active they are in the
research and development of products and services. Answers to these questions give you a preview
of your road to success in the franchise. Other questions to ask include -:
How long did it take for them to be profitable?
What are the pros and cons of the franchise?
How did the franchisor help them succeed?

What are the obstacles they overcame while building your business?
Are their profits consistent?
Profitability of the franchise
Profits rely mainly on the location of an enterprise. When scouting for a location, find information
about the population of potential customers, the traffic you are likely to receive, the kind of business
in the area, whether complementary or competitive. An excellent location means the profitability of
a franchise.
Franchises offer guidelines on how to operate and if you want to have more control of your business,
consider a franchise with more flexibility. Being more flexible may mean a franchisee being more
creative and innovating strategies that may result in higher returns for your business.
As a prospective franchisee, research the current market and the market potential of the prospective
company. Examine the business model of the brand to allow you to have a financial forecast. Get to
know the strategies they use to grow customers’ base and revenue. As the UK franchise industry
rapidly grows, some of the most profitable franchises include pet care, home care, finance and
cleaning.
The Professionals’ Insight
A franchise agreement has legal terms that you may not know their meaning and impact. Consulting
a lawyer will help you understand the details of the contract, franchisors and franchisees rights and
obligations. You may also seek advice from an accountant to help you understand the financial
implication of the agreement and insight on how viable the franchise is.
As you fulfil your dream of being self-employed, take your time to do thorough research before
signing any contract. It will save you money and time venturing into an enterprise after calculating
the risks and rewards.

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Considerations of A Franchise

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An entrepreneur has a variety of ways of starting a venture.

Franchising is a rewarding path to

It is a contractual agreement between a franchisor and a franchisee. A franchisor is an established

Passion and knowledge of the industry

Cost of the franchise

Review the franchisor

How long did it take for them to be profitable?

What are the pros and cons of the franchise?

How did the franchisor help them succeed?

Are their profits consistent?

Profitability of the franchise

The Professionals’ Insight

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