STARTING A FRANCHISE IN UNCERTAIN TIMES

Author- Abha Gupta

UNDERSTANDING FRANCHISE

A franchise is a type of business model in which an individual (the franchisee) is granted the right to operate a business using the trademark, products, and business model of an existing business (the franchisor). The franchisee typically pays an initial fee and ongoing royalties to the franchisor in exchange for the right to use the franchisor’s name and business model, as well as receive training, support, and marketing assistance. The franchisee is also typically required to operate the business according to the franchisor’s established standards and guidelines. Some examples of popular franchise businesses include fast food restaurants, retail stores, and service providers such as cleaning or tutoring services.

STARTING A FRANCHISE

Starting a new business is never easy, it’s a task that requires not only financial aid but also physical, and emotional aid in all aspects. Now, one may consider that opening a franchise of another business is comparatively an easier task then to start an entirely fresh business, or begin with a new idea. However, like the two faces of a coin, opening a franchise also comes with both its pros and cons. Some of these cons include the pressure to keep up with the expectations of the customers, as your business is already an established one, and so are the expectations of people. Other than this there’s also a pressure on the financial side, as the franchisor only lends its franchise if they gain any monetary benefit out of it. So, keeping some of these points in minds, here are a few steps that are involved in starting a franchise:

1. Research: Research different franchise opportunities and industries to find the best fit for your skills and interests. Look at the franchisor’s financials, the size of their network, and the support they offer to their franchisees.
2. Due Diligence: Once you have identified a franchise opportunity you are interested in, conduct due diligence by reviewing the franchisor’s offering circular, which should provide details about the costs, obligations, and potential revenue streams associated with the franchise.
3. Review and Sign the Franchise Agreement: Carefully review the franchise agreement and seek the advice of a franchise attorney. The agreement outlines the rights and obligations of both the franchisor and the franchisee.
4. Raise Capital: Starting a franchise typically requires a significant investment, so you’ll need to raise capital. This can include personal savings, loans, and investments from friends and family.
5. Training and Support: Most franchisors provide training and support to their franchisees, which can include operational, marketing and management support.
6. Open and Operate: Once the franchise agreement is signed, the training is complete, and you have raised the necessary capital, you can open and operate your franchise.

It’s important to note that starting a franchise is not for everyone and it’s important to do proper research, seek professional advice and have a solid business plan in place before making any decision.

OPENING A FRANCHISE IN UNCERTAIN TIMES

Starting a franchise in uncertain times can be risky, but it can also be an opportunity. It’s important to thoroughly research the industry and the specific franchise you are considering, and to have a clear understanding of the costs and potential revenue streams. It’s also important to have a solid plan in place for how you will operate the franchise in a changing market. Seeking the guidance of a franchise consultant or attorney can be helpful in navigating the process. Additionally, it’s important to consider the financial stability of the franchisor and the support they can provide during uncertain times. 

Following are a few strategy that might help one in starting or growing their franchise in uncertain times:

1. Building Community Strength: A franchisee has the support of the franchise community behind them from the beginning, which is a significant distinction between them and an independent business owner. In other words, the franchise model has a business support structure with years of expertise running a successful business. The franchise system additionally offers assistance and resources for a prosperous business. To a potential franchise investor, you might emphasise all these details. Having an established customer base and a well-known brand are further advantages of this model.
2. Information about the General Economy: Contrary to what you may think after reading about layoffs and slowing growth, franchises have generally performed well during these recessions. That’s because despite the fact that many big businesses are laying off employees, many people are still working, and not leaving the workforce entirely. They decide to take matters into their own hands and launch their own business rather than looking for a new job.

 Franchising provides the perfect mix of freedom to make decisions and barriers to prevent you from deviating from the path. This harmony enables franchisors to be innovative in their customer-attraction strategies while still staying on course and hitting the marketing target. There is an increase in the corporate office’s stability, support, and energetic momentum.

3. Personal Economy’s importance: The macroeconomic environment is just one unpredictable factor among many. On a smaller scale, it is also one’s own personal economy. Many people are considering opening a franchise to support their families as a result of the uncertainty surrounding financial futures. 

 The return on a franchise investment is gradual. Based on how quickly one can start earning sales, knowing how much of a financial runway a person has, might assist them to choose which franchise to start. Setting a budget for how much of savings to be put toward for the franchise can also help one maintain a high level of confidence. A person will  be aware of the hazards he’s accepting and able to act properly. Having this budget will also prevent him/her from succumbing to shiny object syndrome, allowing them to tightly control their spending and only open it when necessary.

CONCLUSION

While no business model is completely immune to economic downturns, opening a franchise during one has shown that it can be a wise investment. In addition to giving you the freedom to expand, franchising supports your business with the methods, equipment, and techniques that have been successful in other locations. Your franchise will get off the ground faster if you make a commitment to consistency and rely on the corporate office for resources. This will allow you to launch your business with more assurance, even during uncertain times.