The last 20 years or so saw a boom in the franchising industry. One can even say that it rather established itself as a business strategy - a powerful business strategy that stretches across many industries.
Statistics show that in the USA USA
Franchised business is also a major contributor to economic progress. Therefore, for the potential franchisee there are five well recognised reasons why affiliation with a franchise is valuable. These are the five points you must evaluate a possible franchise against before buying in:
Brand Awareness
It is important that the franchise brand has an established value. Brand value is almost a quick test of the embedded value of the tools and assets available to the franchisee after concluding a contract. If these tools and assets are weak or fail the brand would inevitably be compromised. Therefore, in evaluating the pros and cons of a prospective franchise, brand size and recognition and support by the public play a vital role.
Business Tools
One of the main reasons why franchises are so trusted is that a person not only buy a franchise but he is also buying immediate access to a body of knowledge and accumulated experience. These are found in various systems, tools and know-how that the franchisor owns and operates. The prospective franchisee must make sure he has the opportunity to evaluate these resources. It is important to understand the extent and effectiveness of these resources before committing to buy in.
Training
While training is recognised as a prelude to business growth and success, it is also one of the most neglected aspects, not only in franchising but also in general business. Training should therefore be a non-negotiable aspect in any contract to buy a franchise.
Marketing Systems
It is important for the prospective franchisee that a clear understanding of the strength of the franchisor’s marketing system is gained. There must be evidence of material assets that the franchisee can use immediately on taking control of his franchise. It is important to note that the franchisor is responsible to continue with a national or regional marketing campaign of the franchise.
Recruitment and Retention
It is a known fact that in every business and especially a franchise there is a wealth of knowledge and experience. In the first place, when buying an existing franchise outlet it is imperative to do everything in the book to retain the employees of the outlet. In the second place, when starting with a totally new outlet, it is important to recruit employees with previous experience or applicable experience. In this case the aspect of training is also applicable here – the franchisor must provide training.
Once you have done your homework thoroughly on the franchisor by means of the five aspects discussed, it would be time for the franchisor to do his homework on you as the franchisee. There are definite characteristics required by the franchisor from the franchisee. Start-ups are common in various industries and the franchisor would evaluate individual applicants more closely in area of credit worthiness, personal net worth, previous business experience, a strong work ethics and willingness to learn and expand within the specific franchise family. Remember if you as franchisee is a failure, the brand will also get a bad name. The franchisor therefore has to make sure you have what it takes.
At the end of the day when there is mutual acceptance from both sides, the good thing is that a franchise relationship can take an individual candidate’s business prospective to new heights. There is a vast resource of knowledge, reassurance and strength in a good franchise match – therefore, to invest or not to invest in a franchise is the question only you can answer.
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