This was a question I presented to a high school entrepreneur group. Their responses were intriguing:
“A franchise is a business that may be found in many cities. They are easily identified since their signals and colours are the same.”
“It’s a sort of business that you can find anywhere.”
“McDonald’s is a chain. KFC and Burger King are as well.”
All of those responses are accurate. However, franchising involves more than simply consistency.
What exactly is a franchise?
A franchise is a business that is owned and run by an individual (franchisee), but is branded and managed by a much larger—usually national or multinational—company (the franchisor). Subway, 7-11, The UPS Store, Ace Hardware, Pizza Hut, Hilton Hotels, Molly Maid, and dozens of other shops and restaurants are franchisees.
When you purchase the rights to create this sort of business, you are purchasing the right to employ a tried-and-true business model and system, complete with tried-and-true prices, goods, and marketing tactics. You’re also purchasing trademark rights: You get complete access to the company’s branded materials, such as logos, slogans, and signage—anything related to the brand.
How to Start a Franchise
To become a franchisee, you must pay an initial franchise fee. Paying the first money (and signing the franchise agreement) entitles you to use:
- The company or brand name
- The method of conducting business
- Marketing materials
- Marketing materials Software
Furthermore, you may be assigned a unique geographical region to cover. Territory information, as well as the time period for which you own your franchise firm, is always included in your franchise agreement. This type of contract typically lasts between 5 and 10 years and has the option to be renewed.
Why do some corporations franchise their operations?
Franchising may be an excellent strategy for businesses to expand their distribution. Issac Singer pioneered franchising with the manner he sold his Singer sewing machines, and Henry Ford did the same with vehicles.
However, franchising a business provides one significant benefit to companies: they do not have to invest all of their own money to build their firm. They can instead utilise Other People’s Money (the franchisee’s).
Offering franchises helps the creator to mitigate some of their own financial risk while expanding a firm to several additional locations. The franchisor must still invest money to build the franchise system—they take a big risk putting their company ideas together—but they do not have to invest as much money in each new site.
- Selecting which franchisees to explore
Choosing a franchise may be a difficult task. One explanation for this is that there are over 3,000 distinct themes to choose from. How do you pick only one? Here are three pointers:
Determine your strengths It’s all about finding the proper fit for your skill sets. Here’s something you can do right now to help you in your search: Make a list of your strongest abilities. Make a list of your strongest skills.
For instance, are you a people person or a relationship builder? If so, make a note of it.
Perhaps you are not an outspoken person; perhaps you are better behind the scenes. Are you in charge of operations? Make a note of it.
Write down whatever you’re good at and what you’re recognised for. One method is to do a SWOT analysis on yourself. A SWOT analysis is just a simple matrix that allows you to easily assess your (or your company’s) strengths, weaknesses, opportunities, and threats.
- Match your most valuable talents to franchise opportunities.
This is simpler than it appears. All you have to do now is have the list you just made in front of you while you hunt for franchises to investigate. But where should you start?
Begin your search on the internet. The greatest place to start is via franchise sites. Use your preferred search engine and put in “franchise possibilities” or “franchises for sale” to locate a couple of them. That should keep you occupied for some time. If you don’t want to sift through all of the portals, see my list of The Top 10 Franchise Opportunity Websites. It could save you time.
Next, identify a few prospects that pique your interest. Examine each one to determine whether you can apply your skills—the ones you put down and have in front of you—in these franchises.
Assume you want to start a commercial cleaning franchise. You study the material supplied by the franchisor, and one aspect of commercial cleaning that appeals to you is that it is B2B. (business-to-business). As a franchisee, you would not be interacting with customers, but with other business owners and/or managers.
You review the skills list you established, and they are unquestionably appropriate for a commercial cleaning business. Your best abilities are sales and sales management, and based on the information supplied thus far, your work as a franchisee appears to be quite sales-oriented. You should look into a commercial cleaning option.Simply fill out the “Request more information” form featured on nearly every franchise site and wait for a franchise agent to contact you.
- Keep an eye on trends
I’d like you to become a trend-spotter. I want you to pay attention to consumer and business trends. I want you to keep ahead of the competition.
I don’t want you to be trapped with a franchise that was “hot” when you first looked at it but “not hot” once you bought it.
It’s human nature to be drawn to what’s new and trendy. I’m not proposing that you forgo current chances. What I’m advising is that you pick a franchise that won’t go out of business quickly. Avoid passing fads. Keep up with what’s going on in the business world. Keep an eye on trends.
You must learn what customers (if that is your target market) spend their money on. You must also determine what they are unwilling to pay for—all of this is market research. If you’re thinking about buying a B2B franchise, such as commercial cleaning or corporate training and coaching, you should research what business leaders are talking about. What are their requirements? Do they have the budget?
If you want to remain up to date on the trends that will effect you as a franchisee, start looking for business websites and blogs that often write about current trends.