Buying a Franchise
A franchise opportunity is not as dangerous as starting your own business from scratch but did you know that most companies that decide to franchise their business concept end up failing.
I read an article today that suggested that up to 80% of all new franchisors either fail or end up using another route to expand their market share.
Why is this figure so high? I believe that most people do not realise how many hurdles lie in your path when they decide to franchise their business. The rest is about sheer effort, marketing, developing processes, creating operators manual, recruitment and then supporting your existing franchisees once they come on board.
Finding the right franchisee takes more effort than everything else and is very important in the success of the business model.
Once you have a franchise agreement in place then it will have to be approved by the BFA before you can even start exhibiting at the franchise exhibitions. They also have to approve all your marketing materials including brochures and videos before you can exhibit.
The whole process is extremely lengthy and very costly but if you use your noodles you can cut your costs by over 50%. Most of the so called experts charge a fortune for carrying out very basic tasks.
Pose as a potential buyer and request all the brochures, marketing materials and operators manuals that you can get hold of. These will then give you a fair idea as to what is required.
Bear in mind that they will ask you to sign confidentiality agreements and a few might even ask you to return their franchise packs if you are not interested. It is also important to realise that you can not use their material as they own copyrights to it.
What you do though is get a fair idea of what is required in terms of marketing material and how you might word your own franchise agreement. Do as much work as you can your self before approaching any experts. This should help to reduce your legal fees substantially.
Again if you have a basic outline as to how you want your brochure to look and feel it will reduce the cost of design.
It has made many entrepreneurs rich, not only the franchisees (buyers of the franchise), but also the franchisors (owners of the franchise) as well.
In fact, there are countless individuals who have franchised their business formats, made their franchises grow to national and even to international markets. Success came to them and if you are bold and imaginative enough, it could come to you also - as a franchisor.
If you have a business, it is now time to franchise it like what many other entrepreneurs did, and be rich.
What is franchising? In simple terms, franchising is a business system, a marketing method for distributing goods and services to the consumers. There are two parties involved: the franchisor, who developed and owns the system and lends his name to it, and the franchisee, who buys the right to operate the business under the franchisor's name and methods.
Why franchise your business? Franchising enables you to expand faster by using other people's money. By focusing on other business owners, you can generate more cash and labor to tap even distant and out-of-reach markets in different locations at the same time. Moreover, franchising gives small entrepreneurs and start ups businessmen and women with limited capital, know-how and experience the opportunity to succeed.
How do you know if your business is "franchisable" or can be developed into a franchise? In reality, not all businesses are franchisable. This is because not all formats, systems, and strategies can be transferred. Each type of business is unique and different, with its own product/service characteristics, markets, and geographical reach.
However, your business is franchisable if it has many or all of the following characteristics, stated in the form of questions:
Is your business profitable?
2. Can your business generate and sustain revenue to attract potential franchisees?
Do you have an operating system and procedure for running it?
Is the product or service your business offers fill the needs and preferences of the consumers?
6. Do you want to expand rapidly through other people and in other locations?
Is your business relatively easy and simple to manage?
8. Can you provide training, advice, support, and are willing to coordinate a network of independent business owners?
Does your business offer a different product or service which are distinct from that already in the market?
10.
If your answer to most or all of the above questions are in the affirmative, then your business is franchisable and you can now start developing your business franchise. This way, you become a franchisor and get rich in the process.
