There are endless opportunities for entrepreneurship today, but starting a business that comes with an established brand name is always a safe option. People who wish to get their feet wet with the responsibilities that come along with owning a business can try their hand at owning a Franchise. As it represents getting on board with a successful idea, people tend to be drawn towards franchising. Although there are many challenges which they’ll have to face, it is still a better option than starting a whole new business with a new idea that may or may not work out.
Before we go any further, we must have a basic knowledge of what a franchise is.
What makes a Franchise?
“A franchise is simply a license that a party acquires, allowing itself access to an established business’s proprietary knowledge, processes, and trademarks. This is obtained so that the party (Franchisee) may sell a product or service under the business mentioned above’s (Franchisor) name. Instead of which, the franchisee agrees to pay the franchisor an upfront start-up and annual licensing fees.”
Now, people often think that restaurants like McDonald’s, Subway, Burger King, etc. are franchises. What happens is these companies own the licensing rights to their product names, processes, and distribution network, which means, for example, if some company other than McDonald’s wants to call its burger “Big Mac,” it can’t. It would first have to take the permission to do so from McDonald’s. This is where the concept of the franchise comes into effect. To expand their global business, these companies thought building and running thousands of restaurants was way too expensive, so they decided to sell the rights to use the name of their company along with the products and processes. This way, they don’t have to invest in new assets; they can make a profit by just expanding the reach of their brand.
Let’s consider the example of a very famous shoe brand, Fabindia.
Typically, a Fabindia franchise store is privately owned, and each year it must pay a specific amount to the parent corporation to maintain its franchise. In addition to that, it must also adhere to concrete production and quality requirements. Have you ever wondered why every Fabindia franchise is precisely the same? Why is the design, color, and everything about the store the same everywhere?
That’s because each franchisee is required to keep their store exactly how they’re told to by the corporation.
Types Of Franchise –
When it comes to what kind of franchise you want to own, the options are numerous.
- Restaurants- When we think of the franchise, restaurants immediately come to mind because these kinds of franchises are everywhere. McDonald’s, Burger King, KFC, Subway— these chains are incredibly popular. Subway is the largest and the fastest-growing restaurant chain in the world, with 42,998 restaurants in 112 countries and territories.
- Children’s entertainment/education- These types of franchises range from tutoring centers such as Kumon, to play places like Kidzee and Eurokids. This Industry has been growing extremely fast recently.
- Fitness outlets- these include gyms and various studios for specific activities such as pilates. Anytime Fitness is a good example here.
- Beauty/spa industry- Some examples that fall in this category include: Jawed Habib and Supercuts.
Now that we know what different options you have, let’s talk about the next part, i.e,
Steps to start a franchise.
The first thing you should know is that there is always a franchising fee. Franchisee fee is the upfront payment to the franchisor that paves the way to obtaining the Franchisor trademarks, which contains everything you need to own and operate your franchise business.
Franchisors often have financial provisions for potential franchisees. Going over your personal finances and assets with a fine-toothed comb would be a great idea so that you can start looking for opportunities suiting your price range. Franchisors provide you with a general idea about the necessary equipment and its procurement. Some franchises even offer financing options for these initial costs. Additionally, the franchisor also provides valuable input into location selection and other important decisions.
After estimating how much you’re going to need to start the franchise, both the franchisee and franchisor will must a formal interview where they can discuss the specifics of the franchise and how to make the franchise a success.
Then there is the agreement. A franchise agreement is a formal contract that gives you the legal rights to open a franchise, containing a set of rules and regulations. It is advised to consult with an experienced lawyer to help with your franchise agreement. Discuss the deal and your expectations with the franchisor, and If there are any discrepancies between the verbal promises and written contract, make sure to bring them up with the franchisor. Signing the franchise agreement is an indicator of your level of seriousness towards this investment.
The next step would be selecting a location to set up your franchise. Depending on your budget, you can either purchase a property or lease an exciting space.
You can depend on your franchisor while choosing a location which is correct for the store needs, and to ensure that the foot traffic and traffic patterns align with the hours your franchise will operate.
The next step is crucial for every person who wants to own a franchise.
Franchise Training Programs provided by the franchisor are a must-attend. Such programs not only teach you everything you need to know about products or services, but they also train you in marketing, supplier negotiations, employee hiring and management, operations, permit filing, bookkeeping, reporting, and much more. The duration is usually a week to a fortnight.
Other remaining steps include purchasing equipment, hiring, and training employees. Hiring good employees is also very important for the successful running of a business.
The last step would be organizing a grand opening for your franchise. You can opt for different offers and discounts on an opening day. You can also ask your franchisor what other franchisees have done for their opening ceremonies.
With everything in place, you are all set to start your business. Contact here for the best franchise businesses in India.