What is a franchise?
In a franchise, a business (referred to as a franchisee) pays another business (known as a franchisor) to use the franchisor’s business model and trademark. Typically, the franchisor would offer various kinds of assistance to the franchisee such as training, support services, and advertising.
Becoming a franchisee allows you to work for yourself, but not by yourself. You are the boss of your franchise business, but the franchisor would usually provide a template that you can use. This template will help simplify the process of starting a successful franchise.
The types of franchises you can opt for
When you think of starting a franchise, you probably think of the food and beverage industry, like McDonald’s or Burger King. But in fact, there are many franchises in almost every industry, such as:
- Business service providers, e.g. The UPS Store and Liberty Tax Service
- Travel Agency, e.g. Dream Vacations and Cruise Planners
- Department stores, e.g. Ace Hardware and 7-Eleven Inc.
- Education, e.g. Kumon Math & Reading Centers and Mathnasium Learning Centers
- Health and wellness, e.g. Age Performance and GNC Live Well
- Entertainment, e.g. Painting with a Twist or Wine & Design
- Real Estate, e.g. RE/MAX and Keller Williams
Franchises differ not only by industry, but also by the framework they provide for new businesses. Each offers a unique take on how to start a successful franchise. Thus, you have options when buying one.
With these basics in mind, let’s move to what you came here for, learning how to start a successful franchise.
Tips for starting a successful franchise
1. Consider a franchise starter kit
When starting a franchise for the first time, there are several important things that should be considered, such as:
Franchise track record
Make sure you choose a franchise with a proven track record. It’s okay if you want to try a new business model, but there are more challenges you’ll have to face.
Before deciding to buy a franchise, make sure your finances are stable enough. Depending on the type of business you choose, the starting capital required can be quite a lot.
Don’t forget to consider services that support your franchise, from training to business management software.
2. Choose a franchise that fits your business goals
Choosing the type of franchise that doesn’t match your passion, goals, and abilities will be exasperating. Therefore, before making a decision, get to know some of these things about yourself first:
- Your strengths and weaknesses as an entrepreneur
- The reason why you buy the franchise
- Your business goals and your expectations
Also read the related article: Starting a Food Business: 5 Things You Need to Know
3. Research market conditions
Next, understand the market conditions in your area. Perhaps, you already know the types of businesses with great opportunities around you. However, proper data results will help complement your entrepreneurial instincts.
4. Understand the risks you could face
Choosing a franchise does not keep you from risk or potential losses. Although there is no risk mitigation method that can guarantee your success, you need to consider any possibilities that might occur to avoid losses. It is important to think carefully about the obligations that you’ll have to meet, the opportunities you can obtain, and how you will handle a crisis.
5. Expand connections to open investment opportunities
Franchisors are usually happy to help their franchisees. Still, depending on your franchisor alone is not enough.
As a franchisee, you should expand your business network to help you get funding from investors. Take your time to attend various business events or hold your own seminars so that you can find potential investors more easily.
6. Use technology to integrate your business processes
Your franchisor will most likely advise you to use technology that integrates business processes, especially purchasing, inventory, sales, and supply chain. One of the technology tools that has that ability is ERP software. This system is highly worth-considering, because it allows you and your franchisor to monitor all business operations in real time through one platform.
7. Know the business compliance requirements
The business compliance requirements that you must comply with would most likely include a general business license, a tax registration, health and work permits. Failure to comply with these requirements may result in fines or termination of your business.
Hopefully by following some of the above tips persistently, you will find it easier to start a successful franchise.