In contrast to starting their own business, people are opting to purchase a business franchise since it is very popular nowadays. There are lots of benefits that these business starters can get by choosing this option but their main basis is that since they are only franchising, it is already understood and proven that the said business is already established, legitimate and has a license.
As a franchisee, you are technically buying the license to
use the business’ name, products, services and management support systems of
the franchiser company and it just usually covers a certain geographical area
and that will only run for a certain period of time. One thing is clear though:
Franchisees do not actually legally own the business.
But before you go ahead and take the plunge and decide to
purchase your own franchise, there are things that you need to seriously
consider.
Different Franchise Forms
A franchise business can take different legal forms - most
are sole traders, partnerships or limited companies. Whatever the structure it
is, the franchisee's freedom to manage the business is limited by the terms of
the franchise agreement.
Is it growing?
Here’s a fact: the Franchise Business sector is still
growing rapidly.During 2007 the Nat West Bank carried out a survey into the UK
franchise market which revealed the surprising financial growth of this sector.
The approximate annual turnover of the franchise business sector is in excess of £10.8 billion. What is more interesting is
that the vast majority of Business franchisees are in profit - a total of 93%
to be exact! In 1991 the total number of profitable franchisees was 70% and in
2004 it was 88%.The simple reason why this is growing is that a franchise business is usually tested
first before it goes to market. If it works in one area, then there is a very
strong chance that it will grow in other areas as well.
The right timing
Buying a business franchise’s success and will become more
effective with regards to your profit when you do it on the right time. This is where buying a franchise in ‘key’
areas and in the times when the franchise is generally unfamiliar to the
masses.
Do your research
Before you take your money out of your wallet, make sure
that you have researched everything thoroughly. Make sure that you can see a
return of your investment or ROI. Do not buy a franchise just because you are
too excited to start a business. While it is true that having your own business
can impress your friends, you have to see the reality that it requires hard
work and it is often too difficult to get off the ground. Remember as well that you do not own the
business but you just own the rights to use the brand, products and all which
may be frustrating.
So just carefully think it though and give it a go.
