Buying a franchise provides an exciting opportunity for keen entrepreneurs who are looking to run their own company but are wary about starting from scratch because of the process involved. Buying a franchise provides franchisees a rapid path to long-term profitability and often reduces risk more so than a more conventional startup. Franchise buyers enjoy support from the brand and other companies within the franchise system, access to popular names and established product lines, and many other benefits that contribute to the franchise system being a successful one. Before you buy a franchise, however, there are a number of factors that you need to take into consideration.
One of the first things you need to consider is whether you know a good fit exists. For example, if you are looking to buy a franchised outlet store, the obvious candidate is a location that already exists. But even though a location that is already in existence is a good fit, you must also take into account the popularity of the franchisor’s name and what it stands for in your market. If you know nothing about either of these concepts, it is a good idea to work with a marketing firm or consultant that has prior experience in working with both. The consultant can help you learn more about how to identify a good fit for your own needs and tastes, and then develop the franchise agreement that will ensure that you get the most out of the franchise.
In addition to knowing a good fit, you also need to be aware of the legal aspects of purchasing a franchise. A franchise agreement is essentially the written version of the franchise and protects both the franchisee and the franchisor, and the franchise itself. Franchise agreements vary across different types of franchises, but all of them protect the rights of the franchisee and the franchisor. If you are going to hire a consultant to help you decide whether or not to buy a franchise, one of the things they will do is create a checklist of the most important criteria for each potential franchise location.
The first thing on this checklist will include whether or not the market is saturated with similar franchises. The importance of this is obvious; if there are plenty of other franchises out there, it can be difficult to make your mark on the market. But this issue does not arise if you buy franchises from established system members. When you buy an existing franchise from a group, you are essentially joining a club. Joining this club means that the franchise system has already developed an integrated operation – meaning that the brand is well known and the operations are well coordinated.
In some ways, this fact may even be more important than the fact that the franchise system is well established. There have been many examples of new business owners being reluctant to enter large markets because they feel as if they cannot compete with established business owners. Often this reluctance is born out of an unwillingness to put in the time and the effort to learn the business behind the brands they are considering buying. By joining an established franchise organization, a new business owner has an advantage over his competitors simply due to the established reputation of the franchise.
This leads to another important factor: by buying an existing system rather than starting from scratch, the new business owner is much less likely to feel the sting of being sold down the river by a stubborn franchisor. Most established system members want nothing more than to see their franchisee succeed. If you are seeking a new franchise opportunity, consider this when weighing the pros and cons. There is no reason not to seek out a franchisor that is well known and has an established system to partner with you.