Franchise ownership can provide you with a world of freedom and renewed energy if the franchise you choose is the right fit for you. If you are currently exploring a franchise opportunity, here are five tips to help you find a winning franchise:
1. In-depth research
Acquaint yourself with the ABCs of franchising. Study the market and the domain in which you are planning to buy a franchise business. Some questions to ask the franchisor to get started are:
- How long has the franchisor been operating?
- How many franchisees are currently in business?
- Will the franchisor connect you with current franchise owners?
- Are there any lawsuits and what are the details?
- What is the franchisor’s financial position?
Also, make sure you consider the industry of the franchise and growth projections. Is it a growing industry where there will be strong demand?
Having a business background will surely help you understand the processes faster. However, that doesn’t guarantee that it will automatically make you a successful franchisee. Therefore, do your due diligence to make sure you make a sound financial decision.
2. Identify financial risks
Every business is risky, and franchises come with financial risks too – some of which are unique to franchising. Therefore, as a franchise owner, you have to keep an eye out for factors that may be influenced by the franchisor.
For instance, a franchisor may place restrictions on which suppliers you can use, even though there may be cheaper options available. This is a financial risk specific to the franchise industry, however remember there are also a great deal of benefits associated with buying into an already established and operating brand. Make sure you weigh up these risks to ensure you pick the right franchise for you.
3. Engage a lawyer
Protect yourself and hire a lawyer who will read the Franchise Disclosure Document (FDD) for you. Since it takes more than 20 years’ of education to understand the document thoroughly, it is best to leave the FDD in the hands of experts.
The FDD can run to 50 pages or more which can be intimidating for any new franchise owner. However, the document offers a ton of information, such as training provided to franchisees by franchisors, business expenses that may not seem too obvious, litigation involving the company, bankruptcy filings by the franchisor, and more. Instead of making head or tail about the FDD yourself, let your lawyer do the hard work.
An experienced lawyer should be able to point out any red flags in the document, such as the quality of the trademark, territorial protections, growth statistics; and answer all the queries you may have about the business.
4. Understand the franchise agreement
To understand your rights and responsibilities properly, you must have an understanding of the franchise agreement. If you have in fact hired a lawyer or consultant they can clearly explain the terms and rectify discrepancies, if any. The franchise agreement is a contract spanning a set amount of time. It covers details such as where and how you will run a franchise.
5. Know your scalability
Choose a territory, the area in which you are allowed to serve customers, that has massive potential. For instance, if you have a mobile ice cream shop, your geographies will include certain suburbs, parks, schools, and shopping arcades where your potential customers can come from. Therefore, identify the scalability opportunity for your business. Try to find out how sales can be managed and whether other franchisees can compete within your area.
Many things will help you buy a winning franchise, but the tips as mentioned above, will help you lay a solid foundation for your franchise business.
What is a Valenta BPO Franchise?
A Valenta BPO franchise provides outsourcing solutions to small, medium and large businesses. BPO means “business processing outsourcing” which involves outsourcing non-primary business activities to a third-party. The concept is focused on increasing efficiencies and reducing costs across various services including accounting, marketing and staffing. All businesses need these functions to survive.
The Valenta BPO franchise model is unique where as a franchise owner you work on your business, not in your business. Valenta BPO takes care of delivering the outsourcing services for your clients whilst you focus on acquiring new clients to use these services. The concept is simple and effective.