Ever done a franchising business? With this kind of business, you work under a company (franchisor) that has already established its name, brand, and business model. You, as the franchisee, will pay some loyalty and some initial fee to conduct your trade under the franchise company name and system. This system means that you will be running a shop with the franchisor’s name and system while getting site support and development, brand standards, operating manuals, marketing strategies, quality control, and many other benefits.
However, you will need to get yourself the right franchisor to work with when settling for a franchise business. How will you know if the company is right for you? There are many signs you need to look at from the company before settling for it. Here are six signs to guide you.
Industry Growth
You may not want to invest your hard-earned cash into an industry that’s not growing or stagnant. Therefore, before submitting yourself to this business, you have to know if the sector has potential growth. While some of the franchisors offer detailed reports of the industry they are operating in, it is essential to do your research and develop better industry findings.
Also, it would help to check how the industry is fairing in your location, rather than globally. The industry might be doing well globally, but not good in your area and vice versa. Besides this, if your neighborhood is saturated with the kind of shops you’ll want to run, it won’t be a viable business.
Unit Growth
The growing number of franchise units you will want to invest in shows that the business is growing, while the diminishing numbers tell another story. As stated by the experts at franchise.com, a franchise business involves using a franchisor’s name and brand recognition. Therefore, if they have increasing units, the company is doing well, and more clients accept their brand and products.
However, if the units are diminishing, it means most franchisees are closing down. This might be caused by clients switching to other brands or a poor working relationship with the franchisor. Therefore, you have to do this research and see how many entrepreneurs are working with the company.
Support from the Franchisor
Does the franchisor offer support to the franchisee? It is essential to check the kind of support you will be getting from the company. As a person who has committed your hard-earned cash, you may not want a company that leaves you on your own after starting the franchise business.
Therefore you have to know the kind of support offered, including the growth opportunities. You might even work with a small franchise system, as long as they provide the best support system compared to the larger companies.
Satisfied Franchisees
Before signing that contract with the franchisor, it is essential to talk with other franchisees and see if they are satisfied with the company. Therefore, have a meeting with the existing franchisees and get their opinions, which will help you make an informed decision. Satisfied franchisees will mean their relationship with the company is good.
However, if most franchisees are complaining or suing the franchisor, it means there is an issue you may not want to be part of. There might be no better working conditions, no keeping of promises, less stock, among other issues. Also, there might be that the business is diminishing or the franchisor is not keeping up with the current marketing and distribution demands. It would also be important to get the reasons why the franchisees are not satisfied.
Adequate Earnings
The main reason why people engage in a business is to earn and sustain their lives. Does the franchise business offer adequate earnings? Therefore, before picking any company, you have to estimate the potential gains you’ll get and see if they are sufficient for you.
Some franchisors will offer you the potential earnings you will get by working with them, but that information won’t be enough or reliable. Ensure to come up with your estimate and talk with others to see how much they get.
Marketing and Advertising Support
Does the franchisor have marketing and advertising support in place, or you’ll be doing it yourself? As we all know, marketing and advertising take huge chunks of money. Doing it by yourself will mean incurring considerable costs in running the business.
Therefore, you have to ensure that the business provides the latest marketing and advertising trends, including social media and online marketing, to get more clients. Also, the company has to support your local advertising programs, including sponsoring events, running billboards, offering gifts, among others, to ensure you beat the regional competition.
Even when the franchise business fits the above criteria, you have to ensure it’s a good fit for you. You can’t run a business you are not interested in or have no knowledge about it. Therefore, you have to sign up for something you are passionate about and fit your personality. Together with the above signs, you will fall into a good match.