The typical franchise model is based on providing certain branded goods or services. The franchisor is the owner of the original business who holds the rights to the trademark and the business system. The franchisee obtains the right to operate under the franchise’s name, typically paying an initial fee, as well as royalties, to the franchisor. When you buy a franchise, you will be presented with a franchise agreement that will detail your rights and obligations.
Expect to be required to adhere to the franchisor’s business system. Franchises do differ in the amount and details of their rules for franchisees. If your franchise is based on selling goods or food, you may have to use ingredients, parts or ready-made product provided by the franchisor. If your business is service-oriented, you will likely have to follow your franchisor’s manuals and procedures.
Business ownership offers you the opportunity to take control of your career, finances, schedule and future. You will be your own boss, work hard for yourself, and potentially reap the rewards that business ownership can offer.
Deciding which franchise is right for you is a huge decision. The right business should not only interest you, but the initial investment amount must fit into your budget and it should enable you to live the lifestyle you desire (do you want more free time, more money, control over your work environment?). Additionally, any business you choose to buy must meet a market demand in your community.
If there is no market demand or the area is already saturated with similar businesses, your new business will not have a bright, long future ahead of it. The best advice is to do your research before signing a franchise agreement. Speak with current and past franchise owners and make sure there is in fact a demand for the business in the area you’d like to open the business.
Regardless of whether you have industry or business ownership experience, you can purchase most franchises because they offer complete training, comprehensive support from the home office, a proven business system, and a product or service that has proven itself to be popular and in-demand.
The cost to buy a franchise varies greatly depending on what industry you choose to start the business in, whether the concept requires a storefront, office, home office, or is mobile, what state you buy the business in, and how much overhead your business will require. There are concepts that cost under N10,000,000 to start and other franchise businesses that require the investor to have millions of Naira in available liquid capital. Additionally, many franchise concepts offer financing or can help you gain financing if you’re interested.
This varies depending on the preferences of the franchisor but yes, most concepts will allow you to have a financial partner who may also be an operating partner, if you choose.
Yes, but again, this can vary by franchise concept. Many franchisors will sell area or master franchises within a certain specified territory. These larger territories can be costly. If you own a single franchise and are successful, most franchisors will be pleased to sell you another territory. If you own one concept and would like to purchase another franchise from a different, unrelated brand, this is usually possible unless you plan to buy a competing concept.
Make sure to read the entire franchise agreement and also have an attorney who specializes in franchise law look over the agreement before you sign it. Let your attorney know that you plan to purchase another franchise concept in the future, so he can ensure you won’t have problems.
The chief benefit of buying a franchise is the use of an established brand to market your business. When you start a new company from scratch, you generally have to put in a tremendous amount of effort into marketing, advertising and networking in order to achieve brand recognition and attract customers.
Franchises, on the other hand, are already well known to the public and come with a built-in customer base, allowing you to save the money and effort you would spend just to get your name out there. You will also have the advantage of following a business model that has already proven successful, eliminating the trial-by-error method of developing your own system. Many franchisors also provide detailed guidance for establishing a management structure, solving problems and making decisions.
Not all kinds of products and services are suitable for the franchising model. If you are interested in buying a franchise, check to see if your talents and interests are compatible with a business type that is likely to be franchised. Most people associate franchising chiefly with restaurant chains and fast food, but in recent years many other service providers have expanded through franchising. Successful franchisors include real estate agencies, hotels, printing services, cleaners, landscapers, construction firms, advertising and more.
Short answer: Very probably not. All franchises involve a start-up cost, often a substantial one, and there could be a period of months ahead before you start getting an income. Ask your franchisor how long it will take you to make profits. Ask for financial projections and check these with your accountants. Ask other franchisees in the system how long it took them to recoup their investment.
Not necessarily, as many franchises are geared up for franchisees who are new to their particular sector, but it pays to think carefully about whether the franchise really plays to your strengths. Be honest with yourself. You might be good at, say, gardening, but that doesn’t mean you will necessarily enjoy being a desk-bound manager of a team of gardeners. And how do you feel about being a salesperson? If selling is something you really do not enjoy, franchising may well not be for you.
Not if you have the right support. Look critically at how much ongoing support the franchisor is providing, as well as the initial training. Ask them to describe the profile of their most successful franchisees. Did they all have prior business experience? It also pays to have a good accountant on your side, so appoint one at the start.
There is no such thing as a risk-free business. Even though franchising has proved more resilient in recent times than other business sectors, inevitably some franchises will fail. You can reduce your risk by doing your research, and thinking carefully about whether or not you are choosing a business that really suits your personality. But if risk is something that you cannot afford or bear to tolerate in any shape or form, franchising is probably not for you.
If you have not decided on the type of franchise the you want, you can come in and consult with us for more information about the types of franchise that will be best suited to your needs, or if you are interest in a owing a franchise business but you don’t know what to do next Click here or Here
FBDS is the pioneer franchise consulting company in Nigeria, the country representative of World Franchise Associates (WFA) and a supplier member of International Franchise Association (IFA).
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