We’ve all heard stories of billion-dollar (or peso) brands ringing in profits for their franchisees, and for the uninitiated, it’s easy to believe that such ventures are the closest one can get to a “sure thing”. While it’s true that franchises are a great way to leverage proven brands for maximum profit, studies have shown that, without proper care and dedication, they can fail just as easily as a business built from the ground up. Here are some tips to help you on your way!
READ UP, AND AVOID TRENDS
By definition, trends are “here today, gone tomorrow”. Find out which franchises are proven performers, and avoid trends that will be forgotten as soon as their novelty fades. Once you’ve narrowed down the brands, products, or services you’re interested in, speak with existing franchisees to learn about their experiences and feedback. When all is said and done, it’ll take some legwork and you may end up paying higher fees for more established brands, but you’re also getting the confidence comes with a proven product.
A franchise isn’t an instant business in a box. It requires as much planning and preparation as a regular start-up, and some major franchisors won’t entertain you if you don’t have a plan on how you intend to manage their brand. For example, many franchises require prospective franchisees to provide them with feasibility studies of potential locations.
COUNT THE COSTS
It’s not enough to know how much money you stand to make when embarking on buying a franchise. Work with an accountant to be fully aware of the costs and expenses associated with your prospective franchise, including how big a cut you will be dedicating to your franchisor. You can also look into the possibility of taking out a loan to purchase your franchise, as, several banks have existing programs specifically designed to help budding entrepreneurs, such as BPI Family’s Ka-Negosyo Loans , or BDO’s Small Business Loan program.
In fact, in addition to their traditional loan programs, some banks may be more inclined to lend money if they know it’s going towards a proven brand name!
MAXIMIZE YOUR SUPPORT SYSTEM
Remember, part of investing in a franchise is the knowledge that any problems or concerns you’ll go through in running your branch is most likely one they’ve encountered before, so it’s highly unlikely you’ll have to reinvent the wheel to make your business successful. A good franchisor will provide you with support beyond the initial stages. You can reach out to fellow entrepreneurs who’ve taken the plunge through sites, events, and organizations like Philippine Center for Entrepreneurship‘s GoNegosyo.
Being a franchise owner sounds like a great way to be your own boss, and it is, but be aware that it’s also a great deal of responsibility, as you’re obligated to follow the franchisor’s rules and guidelines on how to run your business. While the franchisor may provide the blueprints on consumer demographics, training, and procedures, it’s up to you to hold up your end of the bargain, and see the plans through.