What is a franchise?
A franchise essentially means buying the license to operate a business using the franchisor's brand, with their products or services and taking advantage of their proven business model. Licensing agreements are used to define each individual franchise and include the terms of the agreement. This can vary depending on the sector and the franchise.
Becoming a franchisee is the perfect way to get started in business. With benefits including;
- Proven business model
- Training and support
- Established brand and reputation
- Business development support
- Marketing support
Thinking of buying a franchise?
If you are considering buying a franchise, you do your research. You should consider all of the legal and financial obligations that come with buying a franchise. For example, the franchise agreement is a strong and binding mutual commitment between the franchisor and franchisee. This contract between the two parties allows both to receive different things from said arrangement but also has mutual obligations towards one another.
The Legal stuff
Whilst the franchise agreement is something to take into consideration before becoming a franchisee, ultimately, it is there to protect both parties. Consistency is vital for any franchisor trying to manage their network effectively and this includes franchisees as well.
How much will it cost?
Whether you are self-funding your new business venture or require funding assistance, you should fully evaluate the cost of starting up your own franchise. There are usually more fees involved in a franchise setup than when starting a new business venture as well as the ongoing costs. Ensure that you have all the financial information from the franchisor including the franchise fee, management service fee and any other fees within the agreement.
Should you require funding to help with your new business venture, banks often look favourably on franchises due to their proven success. As a franchisee you will be following tried and tested systems, you are less likely to fail and in fact are more likely to grow faster than an independent business owner. Typically you will need to invest 30-50% of the start-up costs and you may need to offer security for the remaining funding.
Life as a Franchisee
The benefits of being a franchisee are many and varied. The key to success, however, is understanding what you're getting into before diving in head first. A successful franchisee has to be disciplined enough to stick with somebody else's system without wanting or needing changes. They do have the added benefit of not having to worry about developing systems themselves because those responsibilities fall on franchisors--the people who created them! On top of that, franchisees are often required to manage an entire staff as well as marketing and advertising campaigns for their individual business'. Growth strategies will also need to be implemented that follow the guidelines in order to create a successful entity. Ultimately, the role of the franchisee will vary depending on the franchise they choose. This is an important part of the research process before embarking on a franchise journey.
Your skills and expertise
Generally speaking, experience in your chosen sector is not required as most franchisors will offer extensive training programmes to all of their incoming franchisees. This means that franchises provide the perfect opportunity to change your career and live a life that most people can only dream of. With that said, franchising is not for everyone. A successful franchisee is one who can work within the guidelines set whilst finding ways to push their business forward to become successful. Finding a business you are passionate about is key, you will get out what you put in - so it's important to consider what you want to do.
As with anything in life, there are good franchise networks and not so good ones. This is where Runo can help you. We can advise you every step of the way when it comes to starting your journey into the franchise industry. The team have a combined 100 years of experience in the industry - and they know just what to look for.
Franchise investment fees can range from low to high, depending on the type of business, the sector, size and location. Although this is something to take into consideration, they should not be the sole reason you choose a franchise. Of course with some of the more established brands there is a significant franchise fee, however, there are great franchises with reasonable fees that offer huge potential.