Partnering with a franchisor can be very helpful for your business. It provides you with capital, trust, speed of growth, and improved valuations, among other advantages. However, the advantages and benefits you receive largely depend on the type of business you want to start. For instance, a person who wants to start a bakery will look at the average bakery franchise costs and not focus much on other aspects, such as digital marketing. That’s because a bakery owner will want to focus on local customers.
Although digital marketing will be important for the bakery, it won’t play a role as vital as the cost will. Hence, there are always a few factors that you should consider before picking the right franchiser to partner with.
Six factors to consider before buying a franchise
We have enlisted below six standard factors that you should consider before buying a franchise across any field and profession that can help you get started on the right track.
Demand for the product
You might be a fan of certain local and foreign franchisers and their products, but your like doesn’t matter here. Always analyze the local demand for the product of the franchiser you are partnering with. Just because some product is doing well in some other region does not mean that it will perform well in yours too. Hence, always know the demand first and then get ready to fulfill it by providing the supply.
Track record and trust
Try connecting with some of the franchiser’s previous franchises you want to partner with to get an exact idea of their work practices, ethics, and functioning. This will help you know whether the franchiser is trustworthy or not. Derek Capo, CEO of Next Step China, has advised that it is important to research how the original founders of the company have treated their first franchisees.
Based on the findings, see if it is a wise decision for you. Similarly, make a personal visit to the first group of franchisees. If there are some issues you encounter, consider it as a red flag. Once you sign an agreement it will be difficult to terminate the contract and end up recovering any initial investment.
Budget and return
Like starting your own business, you need to put in regular money inputs into a franchise. Suppose you think that only by paying the initial purchasing fees will you be done with everything; it’s wrong. Depending on the franchiser and the agreement that you have made, there are several other added fees that you need to take care of. For instance, apart from the initial purchase fees, there are royalties or ongoing fees, marketing fees, and fees required to purchase the franchiser’s products.
Along with the budget and expenditure, you should also keep an eye on the returns you will get. If the returns are higher than the investment, only then put your money into a franchise or else not.
Training and support
Identify how supportive your franchiser is when it comes to providing training and ongoing support. Every franchiser certainly has its way of running a business. Hence, you must know whether your franchiser provides you with the right training or not. You can also speak to the previous franchisees to know about the training and support that your franchiser will provide.
Examine the franchise agreement thoroughly
How long your relationship lasts with a franchiser largely depends on the agreement. Hence, it is important to examine the agreement that you are about to sign thoroughly. The agreement should be a win-win for both you and the franchiser. You can take help from professionals if necessary.
Evaluate their success
It is understood that you will be successful only if your franchiser and his or her brand are. Try taking out some time to see how well the franchiser has performed during the past years. Closely monitor the growth of the brand to evaluate its success. Another aspect that can impact your franchise’s success is what customers think about the franchiser’s brand. List down all of this on paper and see if the growth bar is going upward or downward before making a decision.
Buying a franchise is a long-term partnership with some franchisers. Hence, it is of utmost importance that you take your time and consider multiple aspects before buying a franchise. Put all the options available on the table and analyze them all to ultimately partner with the franchiser that can provide you with the best support and growth; after all, it’s about your business as well.