When considering starting a business venture, one may also have to consider owning a franchise as a way of avoiding some disadvantages that accompany starting a business from scratch in the real sense of it. So you need to know the factors to consider when choosing to own a franchise.
There are a lot of advantages to owning a franchise. One attractive reason is that you would be building on an already developed and established, tested, and trusted structure as opposed to starting out your business and struggling to carve a niche for yourself. Brand reputation takes a lot of time, energy, and experience (good and bad) to build. Starting out by owning a franchise means that you are given a head start in your chosen industry.
Another advantage of starting a franchise is that there are so many options in every industry to choose from. You wouldn’t need to stick with a brand that doesn’t suit your every need just because there are no alternatives.
After deciding to own a franchise, the next hurdle to cross is what franchise to choose. Owning a franchise without considering a lot of factors to know if it suits your business goals would mean shooting yourself in the leg in the long run. One thing to note is that franchisors are mandated to file with the relevant Federal and State authorities. To make sure you’re on the right side of the law, remember to always refer to your Franchise Disclosure Document (FDD) for guidance when choosing your franchise.
Below are a list of 9 factors to consider when choosing a franchise:
Finances You need to make reference to Article 21 of the FDD to look up the financial standing of your potential franchise. Be sure to confer with your accountant too to make sure that the franchise is in a good place financially.
Background checks You would need to check the history of the franchise to understand where they are coming from and to know if they are a credible and reliable brand to work with. Articles 1, 2 and 3 would provide guidelines on this.
Market Information Before you decide to own a franchise, you should have credible information on how profitable the market would be in the long run. There is no use starting a franchise on a dwindling market structure.
Restrictions Serious franchises place certain restrictions to protect their brand identity and ensure brand uniformity across all borders. You should understand these restrictions to know if they suit your business needs and goals.
Royalties Article 6 of the FDD would come in handy here. There are certain payments you’d make in the form of royalties on a continuous basis, even after you have paid the initial lump sum. Understand how these royalties are calculated, the durations you need to pay them and if the arrangement is something you can conveniently work with.
Support Structure Does the franchise have the right structure to provide support for your business whenever you encounter problems? How willing are they to help you through crisis situations? You should consider these.
Investment How much can you invest in the franchise and how much is required for you to invest? Consider these to know your financial standing after you purchase the franchise.
Direction Look at your interest, needs and abilities and see if the chosen franchise would align with what you want for yourself in the future. Is that particular franchise something you would find fulfillment from in the future?
Territory Article 12 of the FDD would help you with information as to what territories your franchise would thrive in.
Take advantage of the opportunity Optamark gives to own a franchise that is well-founded, has a reliable market structure and is ready to support you all the way from start to finish.