Articles

5 Things to be Careful about while Franchising a Business

by Isabel Blamey Professional writer
Summary: 

The key idea of this article is to explain the precautions that startup business owners who are franchising a business need to take. 

Buying a franchise instead of starting up your whole new business is quite a feasible option. However, many aspiring business owners step back at the thought of franchising because of the uncertainties involved such as loss of brand equity, compliances, litigations, reduced control, reputational damage and so forth. Fortunately, the risks are not inevitable. Taking up precautionary measures will help you to do away with all the risks and assure the success of your franchise business. So, if you’re still in doubt about how to franchise a business by avoiding all the risks involved, this article will help you. Read the points below.

Knowing the business well

It is obvious that you can’t avert the risks of your franchise until you know about the franchisor and the business through and out. While entrepreneurs are accustomed to running their business based on their intuitions and thoughtfulness, there’s no such freedom when you run a franchise.  You should know everything about the business, starting from their products/services offerings to prices, business model, to advertising methods and sales process to ensure that you are at par with the franchise business.

Get a grip over the legal regulations

For setting up a franchise, acquire a deeper understanding of all the industrial regulations that the franchise business adhere to. It will you prevent you to fall for any legal proceedings later. Anything that is not in order with the franchisor business model will be considered as a violation resulting in lawsuits from the parent company. It is for this reason that most franchise owners hire franchising consultants who will help them understand all the legal complications of the business.

Find out what other franchises are doing

This is a pretty much needed precautionary step for you to assure successful operation of your franchising business. When you well understand what the other franchises are doing, you can follow their footsteps. Screening the existing franchises will only help you to take your business to the market in the right direction.

Know about term and renewal policy

Franchise agreements mostly have a term between 5-10 years and hence needs renewal. Since you are putting up a huge amount of money at stake, starting up a franchise that offers long-term agreement is preferable. However, whatever is the case, make sure you know in advance about the term of the franchising contract and its renewal policy. For that, visit a franchise counsel who will review the contract in and out for you and tell you about the policy.

Business model is consistent and profitable

While certainly there are high costs involved in setting up a franchise business, make sure how much profits you will be getting with it. For this, you need to learn about the market share, opportunities and annual turnover of the parent company. The businesses that benefit more from economies of scale provide consistent franchising opportunities such as a fast-food chain or restaurant outlet, clothing or furniture retailing. You can learn about the prospective of your franchising business by evaluating how vast is the market of its franchisees.

The mere question in the mind about “how to franchise a business” gives chills to novice entrepreneurs because they really do not know how to start a franchise by keeping aside all the uncertainties. Improper planning or non-conformities to the franchise business will not only result in losses or complete shutdown but also legal proceedings. That’s why they need assistance from financial consultants and professional lawyers who could help them embark on their franchise journey fearlessly by coping up all the risks.

The Author is a professional franchise consultant who has his own blog over which he explains the nitty-gritty of setting up a franchise and how one could become successful at it. If you are in doubt about how to franchise a business, read his blogs to get complete guidelines, dos and don’ts of the business.

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About Isabel Blamey Senior   Professional writer

176 connections, 6 recommendations, 590 honor points.
Joined APSense since, June 21st, 2016, From Perth, Australia.

Created on Dec 4th 2019 00:10. Viewed 615 times.

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