Going with the tried and tested concept with fewer risks and better ROI might raise a few eyebrows while understanding how to go opting a franchise business for one. A long-term commitment involves the full satisfaction of the investor, one must ask oneself certain questions before putting one’s capital in it. Albeit, opening a franchise seems to be a highly lucrative option, the one investing all of one’s capital must investigate in all directions to ensure the money doesn’t go to drain.
Despite the fact that a franchising business stays solid even during the economic slowdown, people do make mistakes that result in the downfall of their businesses.
Before striking a deal with the franchisors or opting for a franchise business in the African market, you must ask yourself a few questions
Do I have enough capital: You need to be sure of where you are investing your money. There are different franchises varying from high capital cost to medium and low capital cost investment franchises. From franchise business below 50k to franchise business below 5 lakhs, there are various options in the low investment category too. You must consider this criterion and strategize accordingly.
What leadership is provided by the franchisor: A franchisee would expect adequate training and consistent support for its business model success.
Any hidden clauses associated with the contract: A new franchise can never afford to have surprises in their kitty while working on their project. The contract and cost must be completely transparent.
Case Studies on Franchises success and failures: It is always better to study thoroughly the work you are thinking to start with. Case studies help people decide and prepare for the reality of opting for a franchise business.
Current and Expected challenges for the brand: The interested brand you wish to invest your money in might have or may face certain challenges. A proactive approach will help you create a contingency plan and adopt a better strategy for your project.
Align your objectives with the goal of the franchise: It is important that your long-term objective and the goal of the franchisee you are opting for share the same page.
Study the contract: A clear study of the franchisor contract is advised before signing under the dotted lines. A very prominent contact clause has come up during the COVID-19 crisis- Force Majeure Clause. Force majeure is a contract clause that removes liability for catastrophic events, such as natural disasters and warfare. In business practice, a force majeure is a contractual agreement between parties that excuses no-performance of the contract in a situation that is beyond their control. Some franchisors might deny COVID-19 as being Force Majeure and especially during this time, it becomes important such a contract must be questioned.
With an exhaustive list of franchises to select from, it is required for potential franchise owners to understand their strengths and weakness too, before opting for a franchise business. Hastily investing your capital is never a good idea. While some businesses are great for someone, they might be a failure for some. So, in the opinion of experts, the foremost question one must ask is whether you see yourself in that area or position, are you ready to invest not just money but your time too and still work with all that vigour every single day. Franchise business details are the best way of deciding accurately on your journey to the equivalent.
These might seem very basic steps but surprisingly make a great deal of difference to your business model.
