Now it’s easy for people to create a franchise business to gain profits.
There are a lot of franchisors doing “hit and run” by opening many branches and making the franchisee as a cash cow only. The maintenance is lousy and ultimately results in disappointment from both the center and its franchise partners.
Proposing a franchise is not easy, what else if a small capital. Do not expect to profit as presented by the franchisor. Business is business. Everything remains a risk that must be faced. However, at least by choosing the right franchise business, we will not regret it much later.
This article will briefly review how to choose a good franchise business so that it can become your business in the future and long term.
Choosing a franchise that will be bought and run is not the same as buying an electronic item that has a warranty and can be replaced if damaged. Since the beginning will buy a franchise, we must pay attention to the basic things as an indicator that the franchise has been tested.
The following questions must be in your mind when choosing a franchise business:
# Is The Franchise Business Legal?
Nobody wants a problem with the law. Therefore, from the beginning, you have to ensure that the franchise business you are about to buy has a business license. Many franchise businesses are out of business because they are involved in legal cases; you certainly don’t want to experience them.
# How About The System and Capital?
The characteristics of a good franchise business have a strong system and large capital. Apart from the length of time the business survived, you can also search for information, how many branches were successfully opened within a certain time range.
If it turns out that the age is still small, for example, and they have managed to open many branches, this could be another consideration. It could be that the business is really working, or they are indeed great at attracting prospective franchisees so that many join in.
About capital, at the beginning of the business, will require a large amount. The first three months are generally burned down for promotional purposes and buying raw materials.
# What is an Ideal Age for Choosing a Franchise Business?
Paying attention to the age of a franchise is one way to choose a franchise business that you should consider. With so many franchise businesses in circulation, of course, this will make it difficult to choose a franchise with good resilience.
The ideal age to measure the resilience of this business does not exist — however, the most recommended minimum of 5 years old.
This age is considered the most ideal because usually, companies have gone through various kinds of trips, ranging from human resources, financial, marketing, and operational. In essence, the older the age, the generally better.
Besides, do not immediately believe the sweet promise can be profitable in just a few months. Remember! Do not because the marketing system and techniques are well packaged; it does not mean you can have high expectations and are reluctant to leave business regulations on employees.
# How Much Does It Cost?
Things that must be remembered, FRANCHISE FEES CANNOT BE RETURNED (REFUND). The range of costs also varies, from tens to hundreds of millions. It can even reach billions depending on the type of business.
Franchise fees also include royalty payments. Try to see the agreement again, whether the franchisee is obliged to pay royalties even though the income is not yet maximal, what else in the initial month will certainly come up short because they have to pay equipment and marketing costs. Usually, these royalties are requested in return for using the franchisor’s name.
# Accountable Financial Statements
Before dealing with a franchisor, first look at the financial statements. A professional business should have financial statements that are neat, easy to read, and conditioned based on facts.
In this case, try to look again at the details of expenditure and income projections in the financial design, is it profitable. You should also have a basic knowledge of the basic prices available on the market.
# Does the Business Franchise Fit in Your Location?
Paying attention to the right location is one way to choose a franchise business that requires a lot of visitors. The location of a company is indeed very influential on the level of success of a franchise. However, it does not stop there, and a crowded location does not always mean a franchise business can be successful.
We must see whether the franchise products we sell are acceptable to the local community. So, not just looking for a crowded location but also have to adjust the franchise products to be marketed.