5 Things to know before becoming a Franchise Owner
Opening a franchise may be an appealing idea when looking to establish small business ideas. Buying a franchise is indeed a good path to run your own business. With various challenges comes various advantages as well for opening a franchise business. You can get the benefits of automatic customer acquisition because of the already established brand value and reputation. Along with that, you also get to have access to advertising and marketing, operational management to streamline your work process efficiently.
What is a Franchise Agreement?
Before starting any franchise, it is highly recommended to take professional advice from company consulting services. You can learn more about franchise survival fundamentals to understand how franchise businesses work and affect your business opportunities.
The franchise agreement is a legal document that sets out a chosen amount of time for which you are allowed to run the franchise business. Often the time ranges to five years. The agreement enlists how or where you can run the franchise, terms, and conditions with responsibilities each mentioned under a clause.
To better understand the challenges of running a franchise business, here are five business strategy plannings you must be aware of before diving into the opportunity.
· Know what the real cost would be like
Be it any fresh venture ideas, the first and foremost thing to know and plan is the total investment. Running any business, especially any franchise, should include purchasing, inventory, working, human resources, and many more. You need to keep in mind these figures as you don’t want to run out of money in the middle of your venture.
As an owner of a whole franchise, you’ll have to have extra capital to cover unanticipated costs. As a result, it is crucial to know that franchise business will always come with financial risks.
· Know what you are passionate about
Imagine you love fried chicken. What comes to your mind when you first think of crispy fried chicken? If we guess that right, it has to be KFC!
When it comes to running a business, you are the owner who needs to hire people to deliver different services, right from selling to customer management. Additionally, when the business type matches your taste, and you have enough information about it, it’s rather a great idea to be a franchise owner when you suit yourself with it inside and out. You will know what or how customers would love their fried chicken and the best offers they are most attracted with.
· Keep an eye on the Disclaimer Statement
Franchising in Malaysia is regulated by the Ministry of Domestic Trade and Consumer Affairs. Before entering the agreement, you must receive certain documents comprising the franchise deal, code of conduct, disclosure form, and statement.
What is the disclosure document? It is a list that enlists existing franchisees with the same business. As a strategic thinker, you can try talking to those franchise owners and ask them about the challenges and issues they might have faced.
· Know if the franchisor provides any help
Unlike your fresh venture idea, which is to start everything from scratch ALONE, you have everything set on the table here in a franchise. You need to know how much support you are gaining from the franchisor.
You can research other people’s experiences. Know how they were helped by the franchisors when they faced any issues or crises. This is one thing that creates the most problem since you can’t just act on your own when something goes wrong. Nor can you depend fully upon them to help you.
· Know what your exit will be like
Planning the end game is the smartest strategy in business strategy planning. Knowing the exit strategy will make selecting the right franchise opportunity easier. Whether you plan to run it for five years and then flush it out or leave the responsibility to your children is your call.
All you need to do is decide the right exit plan to support your goal and objectives.
The Conclusion
Running a business or a franchise comprises challenges, advantages, and disadvantages. You need to be transparent about which franchise would suit you better. And above that, whether you are made to be a franchise owner or not.
To answer this question, here’s a perfect gateway to know whether you are suitable for startups or franchises.
Many business professionals are interested in first getting advice about their capabilities. Often it is done by making them join strategic corporate skills training programs. Different professional business coaches in Malaysia engage themselves in training aspirants from their years of experience.
