Image: Tomas Martinez
A franchise is a business that’s already been established by a separate business owner. They’ve already built the brand from scratch, and have likely experienced a fair amount of success. At some point, the business owner came to the conclusion that they wanted to branch out and grow their brand. So, they franchised it.
Effectively, franchising is where a business owner gives someone else the right to use its brand and business model to produce and market a service or product. This other party can now run a business under the name of the franchise, dealing with all the daily operations and making money as they please. For many entrepreneurs, this is a great way to own a business without starting from scratch. If you own a franchise, you are a business owner, but you don’t have to worry about establishing your brand - it already exists.
With that in mind, you might wonder if you could own a franchise one day. If this is something that interests you, here are a few key talking points that need to be thought about before you choose to go down the franchise route:
How do you buy a franchise?
In essence, it’s a very straightforward concept. All you have to do is find a franchise opportunity, which you can do on sites like Franchise Direct. There will be loads of listings, your job is to find the right one for you.
Some tips for finding the right franchise include:
Picking industries you have experience in
Checking the fees and rules
Researching the franchisor (the owner of the business)
Understanding your main competition
Typically, as long as you have enough money and can impress the franchisor with your business plan, you can purchase a franchise with no issues at all. You don’t have to worry about things like licensing as they are already taken care of.
What are the benefits of a franchise?
The main advantage is that you get to own a business with half the stress. You won’t have to look around for business funding or hope that your business idea gets approved. You also don’t have as much to worry about on the risk front. This franchise is a successful brand already - you know there are people that will be interested in what you sell. Some franchisors will also offer support, meaning you could get training that helps you on a personal development level.
What are the downsides of a franchise?
The downside is that you do have to give some of your profits to the franchisor. But, this isn’t too different from handing profits over to investors. You also may be forced to run the business in a specific way, as per the franchisor’s demands. Again, you can avoid this by reading all the terms and doing the research before buying a franchise, ensuring you pick one with a franchisor that offers more flexibility.
Is this the right approach for you? It really depends on your business goals and aims. If you’ve always had a business idea that you’d like to make a reality, owning a franchise isn’t for you. But, if you’re after a quick way to own a business without needing to worry about the startup stress, it could be perfect for you.
