If you’ve always dreamed of becoming your own boss, joining a franchise is a fantastic way to launch a business with plenty of security and support. However, unless you have previous experience running businesses, running a franchise will be unlike any role you’ve held before, and it’s vital you understand as much about the process as possible. Our guide will provide you with everything you need to know before you become a franchisee.
What is franchising?
A franchise is a method of distributing services or products which involves the franchisor, who establishes the brand and business model, and the franchisee, who buys into the franchise for the right to do business under the franchisor’s name and system.
Franchises to suit every investment
There is a vast range of franchises in every industry to suit every budding franchisee, with more putting opportunities on the market every day, which will make it easier for you to find the ideal franchise. When doing research to find the perfect franchise to suit your requirements, be sure to check out the fantastic range of opportunities over at Franchise Local.
Running A Franchise Requires Hard Work
Successful franchise businesses don’t spring up overnight; franchisors offer invaluable advice and help to get you up and running, but launching and maintaining your business will require hard work. You won’t be going at it alone, though, as you’ll be able to rely on the years of experience and support in business management from the franchisor every step of the way, no matter how long you’ve been running your franchise. Ultimately, the success of your franchise relies on your hard work and the time you put into the business as it would with any type of company.
Funding to cover running costs
When you first start your franchise, you will need to ensure that you have the appropriate funding to cover the running costs until your business begins to make a profit. Once you begin making a profit, it is vital that you create an emergency fund to cover any unexpected costs that may arise as you would with any start-up business.
Don’t forget the marketing fees
Most franchisees are already aware that they’ll need to pay a franchise fee as well as ongoing royalties after the initial set-up fee. However, many people interested in becoming a franchise are unaware that they will be required to pay a regular marketing fee. Typically, this fee is a percentage of your franchise’s gross sales, and it will be used to cover the franchisors nationwide marketing campaigns.
As well as the marketing fee, you will need to pay for marketing in your local area to ensure that potential customers are engaging with your business. Paying for adverts is a great start to any local advertising campaign, but you could also introduce discounts, competitions, donate prizes to charity events, or sponsor a local sports team in order to get your franchise at the forefront of everyone’s mind.
Inspect the franchise agreement
It is vital that you thoroughly inspect the franchise agreement before you sign it; this is to ensure you are aware of every clause that may be present. Since the pandemic, franchisees are more aware of the need to protect themselves in the event of other extraordinary circumstances affecting business. A clause called the force majeure changed the franchisee’s obligations in the event of these circumstances and can be invoked to stop paying fees for a certain amount of time in order to maintain the business in extenuating circumstances.