You might have heard of franchising a business, and you are sure to know that many of your favourite stores and restaurants are franchises, but do you know how to start one of your own?
What is a Franchise Business?
A franchise business is one where the owner licences out various operations to others, allowing them to create their own ‘versions’ of the business. It’s a way of distributing products or services, via a trademark or trade name. This is done in exchange for a franchise purchase fee, and a variety of other ongoing costs including royalty fees. Setting up a franchise business generally includes being able to use the products, branding and industry knowledge of the original business, as well as having the right to conduct business under the franchise businesses’ name.
Why Start a Franchise Business?
There are a lot of reasons to start a franchise business, which is why it’s becoming one of the most popular ways to start a new business venture. Instead of having to start from scratch, you can start a franchise business with a proven business model behind you. Franchise businesses tend to have a higher success rate than startups, because the kinks have been ironed out and someone else has already put everything in place. You can start, knowing that success is within reach.
Common Types of Franchise Business
There are a lot of different franchise types to choose from, and not all businesses work well as a franchise. Food and retail are some of the most commonly franchised businesses, along with gyms.
Pros of Franchise Businesses
Franchises have a business model that is proven to work.
There is an existing support network around you, and help is there should you need it.
It’s usually cheaper to invest in a franchise business, as a lot of the work has already been done for you.
Cons of Franchise Businesses
One of the major downsides of starting a franchise business is the cost. You will usually need to pay a startup fee, have access to liquid capital and pay ongoing costs for the right to use the branding. There are also ongoing costs to consider.
With a franchise business, you are somewhat restricted on what you can and cannot do with the brand.
How to Start a Franchise Business
Before you start a franchise business, you need to research the market. Think about the costs involved with starting a franchise, and whether there is space in the market for your business to be successful. It’s also important to create a business plan, to ensure that you and everyone involved is on the same page. Once you have done the preparation work, it’s time to move onto the franchise agreement. This will detail what you can, and cannot, do with the business and branding.
Eventually, it’s time to form the business itself. This means finding a business location and hiring spaff. Your business location could be from a retail space or commercial building, or even a flexible workspace, depending on the type of franchise business you have.
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