Franchising is a great way to invest in an already established business model. Using a known brand and a successful business strategy, you can quickly get up and running and start making money.
But there’s a lot to consider before you invest your time and money in a franchise. There are many different types of franchising, features of franchising and franchising strategies to consider. Getting started with franchising takes research and commitment, but the rewards can be well worth it.
To help you with your next franchise business, we’ve put together this detailed guide to getting started with franchising.
What is franchising?
In business terms, franchising is taking an already established brand or business model and setting up a ‘franchise’ or a copy of that business.
Often, a successful company will allow their brand to be licensed by an individual or groups of people who then replicate the concept. The ‘franchisee’ will purchase the licence, and will run the business in a new location.
In exchange for the franchise licence, the franchisee will pay an initial upfront cost, and either an annual payment or a percentage of profits back to the franchisor. Understanding the concept of a franchise is the first step to getting started in franchising.
What are the advantages and disadvantages of franchising?
There are many franchising advantages to be had in the business world. The most important advantage is that franchising gives you access to an existing brand.
This will be a proven business model and you are franchising that business model because you know it is successful. For example, the brand is already well known and you have the advantage of being able to quickly turn a profit.
There will already be an established customer base and desire for the product and little of the uncertainty that surrounds opening a new business model or concept. Franchises are tried and tested and can be very profitable.
The importance of franchising is found in the fact that you are given access to insider business models and knowledge. You are also given support from the head office of the franchise, access to national franchising marketing campaigns and training and development.
It’s in the interest of all parties involved for the new franchise to be successful.
There are disadvantages too, of course. Before investing in a franchise, you should consider that franchising involves a heavy start-up cost, and you also have to make annual payments. You also invest your own personal money and it’s your money at risk.
Finally, you may have very little say in how the business is actually run as the franchise is based on an existing model, although you do receive much more support to run a franchise effectively than you would your own business.
How do I start a franchise?
You can find franchising examples across a multitude of different industries. The first step towards starting a franchise is to identify which industry you are interested in working in.
Once you have identified this, you need to narrow down which company you would actually like to franchise. You’ll be pleasantly surprised at the number of brands that actually offer franchising opportunities.
Which industries offer franchising?
Franchising is often seen as the sole domain of fast food outlets, as big brand names in this industry have become the most successful, or at least, the most well-known franchises across the world.
Fast food franchises are a fantastic example of successful franchising and how they can be taken global using this business model. They aren’t the only industry you can be involved with, however.
Popular franchising opportunities can be found in industries as diverse as car manufacturing, retail, travel and cinemas. Choosing a franchise will depend directly on your interests and your skills, as well as what opportunities are available in the market where you plan to do business.
Once you’ve decided on the industry, you can narrow down your search to find a company to work with. If you already love a particular product or service, then why not see if you can open a franchise for this?
You can ask a specific company for a franchising pdf detailing the benefits of opening up a franchise with them when you’re at this stage.
Where can I open franchises?
Franchising does have its constraints as franchises of the same company do not want to be in competition with each other. You will need to correctly identify where there are gaps in the market.
However, how do you find out where particular franchises already exist and whether there is an opportunity to open one? You will need to research the potential market and determine if there would be enough demand and customers to make the business profitable. It doesn’t matter how established a brand is, if there are already other businesses catering to the same market or selling a similar product, it will be hard to make a success of it.
Ultimately, franchising can be a great way to invest in an established brand and to start turning a profit quickly.