If you have come here looking for an idea to get a successful shot at business, read on. You are in the right place. We are going to be discussing the concept
of franchise from an investment and business point of view.
What is a Franchise :
A franchise is a business arrangement in which an owner organisation confers the rights to its trademarks and overall brand to another
individual or firm in return for appropriate value. In this case, the owner organisation is called the franchiser and the individual or firm is the franchisee.
Franchise is an agreement between the two parties, the franchiser and the franchisee which clearly states the rules of business, which are put forth by the
franchiser for the mutual benefits of both the parties involved.
Franchising is a globally tested method for developing chain stores and establishing your brand across the globe. This advantage is in the franchiser’s favour.
However, the franchisee also stands a potential advantage of cashing in from an already established and reputed brand. This is a win-win situation for both the
parties involved, and hence, is greatly favoured in the business world.
Before we dive in, here are some reasons why you should be considering Franchise for investing your time and money:
1. You get to run your own business
2. You minimize your chances of failure because what you own is already successful in some other demographic.
3. You do not have to establish your brand from zero. You get to cash on an already established brand.
4. It is easy to attract an audience as the brand is already well known (in most cases)
5. You get guidance from your Franchiser in driving maximum profits from your business.
6. There are important rules and standards already set for your business by your Franchiser, so you don’t have to worry much about legal errors which
you might be charged for (which is a common case with new businesses)
Things to look for when looking for a Franchise Investment
• Business Model
The business model which your business will follow for the franchise is controlled by your franchiser. Hence, it is advisable to go for a franchise investment
with a well built, sustainable future-ready model. Something which adapts to the current changes of the economic world and which is promising enough to tackle
changes of the near future. Let’s consider an example. The current global economic depression has created a retail model that dominates the world at this
present time is, branded expensive products or very cheap low-quality replicas. Between these two extreme trends, a new approach that combines quality,
smart design and affordable pricing is a combination that creates absolute competitive value to the consumer. The businesses that follow the above stated
philosophy enjoy a large increase in sales value worldwide, achieving high profitability rates, resulting in quick deprecation of the initial investment.
This type of business model was developed and tested by a team of experts lead by George Leventis in Europe for developing their retail products brand Best For
through the Franchise model. Best For enjoyed an overwhelming response from the European audience. After success in the European continent, it has also opened
its doors in Asia.
• The Franchiser
You, as a franchisee will take advantage of someone else’s well established brand. For this, the most important thing is buying the franchise of a
well-established brand. This again relates to our previous point. If your Franchiser is positioned well in the market, you can cash-in on their brand with
minimal efforts. If the franchiser has successes to boast about with previous experiences, you have a fair shot at success too. The people involved with the
brand also play an equally significant role in deciding your odds of success for the franchise you are buying.
If we consider the example of Best For in the previous point, George Leventis plays a key role in the brand. Apart from being the Founder and CEO of the
organisation he has been a Franchise Development Consultant. He also holds a PhD in business administration. A brand which is in the hands of well qualified
can rarely get off-path.
Having a background check done on the key people involved in the brand is crucial. You would rarely want to hand over your investment to a group of
friends who are wishfully playing the cards in hope of being successful at it “someday”.
• Requirements
As stated earlier, Franchise is a business agreement between two parties. The Franchiser will have specific requirements which should fulfil to be eligible
to be a franchisee to the franchiser. As you are going to have a background check on the brand whose franchise you wish to buy, the brand also has the
arrangement to perform similar checks on you. You must fit certain criteria. Most of the franchises will require you to have a specific budget set aside for
the business and will cross check with your location for the franchise. Continuing with our example for Best For, this brand specifies the size of
the store (80 - 250m2) and the locations where you can have the stores like high streets, shopping malls, pedestrianized streets.
• Returns from the Franchise Investment
The next, and the most important thing which is to be considered while investing in a Franchise is the Return on your investment. You are going to be
selling goods under someone’s brand, but you will need to invest for all the costs incurred on the way. You generally must invest in setting up the store,
in raw/finished products received from the franchiser and also the staff involved and also for getting license from the Franchiser for the franchise.
However, each Franchise differs from the other in this respect and you can get a brief idea about all the investment details by getting in contact with the
franchiser.
"If you are successful in selecting the right franchise, you have kick started your journey to a profitable and successful business. Now you must work your
way up the ladder by driving more customers and increasing profits. And Lo!! You have a profitable successful business."
