Opening a business is a risky investment. To begin with, you have to consider the concept, master plan, and capital. After getting all of this together, you can just hope things work in your favor. Unfortunately, not all businesses manage to make a name for themselves. Some entrepreneurs hope to find their cash cow, but in reality, they end up putting their money down the drain.
One option people consider for their business ventures is franchising. And most of the time, it works. Just look at the lawn treatment stores you see everywhere, as well as fast-food restaurant joints being flocked by customers daily. This shows how powerful a franchise can grow your capital by a significant margin.
What Is Franchising, Anyway?
In layman’s terms, franchising is the licensed agreement of two persons:
The franchisee, who buys the rights to a business’s brand, offered products, and services
And the franchisor, the one who will provide said rights, in exchange for some fees and royalties.
As an example, your local fast-food restaurant joint right around downtown is currently owned by the franchisee, yet they don’t own all restaurant joints of the same name; they are owned by the franchisor.
The Hits and Misses of Franchising
Franchising has pros and cons. Fortunately, the main draw of franchising is that you do not have to start from scratch, as things are already laid out of you, kind of like an instruction manual.
As proven by the franchise’s numerous locations being up and running for a long time, you will never worry about the trial and error experimentation that a new entrepreneur needs to do to make their business go off the roof.
Franchising also significantly increases the chances of your business being successful, as you are using a recognized brand. No need to think of advertisements or other ways to get your business booming as your franchisor already did that for you before you even start.
But while these advantages look and sound promising at first glance, you also need to consider the disadvantages that come with it. For one, you cannot do any experimentation at all. You have to follow the rules and guidelines that the franchise wants you to do. In addition to that, you have to pay your franchisor continuously, usually monthly, to continue running it.
How Can You Get In?
If after all of that, you still want to be a franchisee, here are some things you need to consider.
First, you have to ask yourself how much you are willing to invest. Do you have enough capital at this point? After you set your capital in stone, you might want to start researching. What brand are you going to choose? Is this business currently rising as a whole, or is it dropping like flies? Will your franchise fit with your preferred location? Who will your competitors be? Will you get support once you get in? And finally, is the business legitimate at all?
Then, it’s time to apply for the franchise. You can inquire at your future franchisor’s main office yourself or seek the assistance of a business broker. Either way, you have to prepare the necessary paperwork. Your future franchisor then will reach out to you. After some meetings and inspections, all you need to do is pay the fee and sign the contract.
Is Franchising the Best Fit for You?
Franchising is a good place to start for entrepreneurs, as you will be provided with a system that is optimized, thanks to your franchisor. All you need is to let them teach you their ways, and you already have a head start. On the other hand, if you are the kind of person who does not prefer “cooking by the book,” then this option is not for you. You might want to start from scratch to gain full control of your business.
Whether if it’s through a franchising agreement or a business concept that you formulated yourself, a business is still a business – a source of income that has high risks yet many rewards. You could be a beginner or an adept veteran. Either way, always consider that entering a business means that you have the full responsibility of making sure it will not fail.