Almost every successful businessman with free capital has at least once thought about investing in an already established highly efficient enterprise. In this article, you will learn about the advantages and disadvantages of such an idea, and, based on the data obtained, you can decide on the feasibility of this decision.

Should I run a Franchise?

Whether to start a franchise or not - everyone decides independently. Such an event has both advantages and disadvantages, both for the parent company and for the franchisee. To understand the intricacies of acquiring a ready-made entrepreneurial model, we will consider all aspects of the issue in more detail.

Pros and Cons

The positive aspects include the following:

• Lightning-fast development, thanks to a streamlined sales system.
• Minimum marketing costs - the brand is already recognizable among consumers.
• Real help from the company - in reporting, training employees, purchasing and servicing equipment, etc.
• They already have a reputation management team.
• The possibility of obtaining soft loans (not always).

The negative sides include:

• Work in a strict corporate framework - with clearly specified suppliers, according to the standards and rules prescribed in the contract.
• Overpriced purchase and regular deductions.
• Unfair terms of termination of contractual obligations.

Steps to Start A Business Through A Franchise

Before launching production or providing services under the auspices of a powerful brand, plan all the steps of this event in advance. Here are 7 factors on the path to success:

1. Idea Evaluation

Do you like the idea? Take your time to pay the first installment and sign papers. If you like it, it does not mean that it will be popular in your area. Look for competitors; subtly ask how they are doing. Review statistics; compare them with the profitability of potential customers. Do not forget about seasonality, exchange rates, and other aspects.

2. Testing Your Own Strength

Find out what you need to do on a daily basis for your beginnings to flourish. Project this onto your graph. If you need to engage in active sales or stand for 10 hours at the trade counter, replacing sellers, think about whether you can give all your best.

3. Franchisor Research for Legal Purity

Now there are a huge number of services for checking legal entities and the legality of their work. Such services are usually paid, but it is better not to spare money, since in the future, in case of problems, you will lose much more.

4. Business model

Before getting a franchise to open, evaluate your plan. This should be tried, even if you are new to the economy. See if the budget includes items such as rent, renovation, and employee taxes. 

Often, companies do not talk about unnecessary spending on press release distribution, because they might be trying to improve their reputation due to some reason. Try to observe the pattern and ideology that the Parent Company follows.

5. Communication with The Owner

Today, the rights to start a business under the auspices of the parent company are often acquired through online transactions. However, it is better to visit the office of the organization before buying, to personally meet with the person. This will help you to evaluate his experience, knowledge, and credibility.

6. Communication with Existing Network Members

This is one of the most important conditions. Find out in the catalog the contacts of 5 to 10 franchise partners who have been successfully working for more than one year. Ask each of them what support was at the start and what is now, what is the payback, how much the organizer complies with the agreements, and are there any plans to expand. Ask whatever you think is necessary.

7. Analysis of The Contract

Do not forget to assess the possible risks when signing a document. Often, the papers contain strict exit conditions. If you are poorly versed in this, give the agreement to an experienced lawyer.

Output

The correct selection of the franchisor plays one of the key roles in the successful development of a novice businessman. It is necessary to evaluate all the subtleties of the future event and only then proceed with the implementation of the plan.