The Right Way to Buy a Franchise

The Right Way to Buy a Franchise

Entrepreneurs should do their homework before they invest into any franchise there are several steps that can help them to make the right choice. First, they have to evaluate themselves by asking several questions as what their goals is, their experiences, what kind of risks they are willing to take and what characteristics should be available in them to achieve the required success, there are several personality traits that should be found in each entrepreneur that is willing to invest into a franchise. They should have Commitment to achieve success, they have the ability and the willingness to learn, they should be team players and have the ability to work with others, Patience and understanding that success will take time to be achieved and having leadership skills that they can apply it on ground, and many others traits. Second, they should start researching the market and answer some of the following questions How fast is the overall area growth they want to operate in? How many competitors already operate in the area? How strong is the competition? Who are their targeted customers? What kinds of products and services the potential customer would like to buy? What gaps exist in the market can be fulfilled? After answering those questions, the third step should be considering their franchise options and this can be achieved by knowing what franchises is available in the market by searching specialized resources interested in this kind of business or searching the web by going through The Web sites of organizations such as the International Franchise Association or by attending events where the franchisors gather to sell their franchises, once the entrepreneurs narrow the franchise choices the fourth step should be getting a copy of the FDD (Franchise disclosure document )of the franchisors they are interested in to evaluate the franchise opportunity and potential and this will be discussed in details later. After selecting potential franchise, the entrepreneurs should start to talk to existing Franchisees which been in the field for quite some time to understand the positive and the negative features of the agreement and whether the franchisors delivered on their promises after answering and following all these steps entrepreneurs can make their choices to select the most suitable franchisor that which is right for them.

Types of Franchising

There are three basic types of franchising the first one is the Trade-name franchising: which only consist of buying the franchisor trademark without having the obligation to sell a particular service or products related to the franchisor example of cars spare parts stores which can have the same trademark and selling different brands of spare parts   the second type is the Product distribution franchising: in which the franchisor sells manufactured products to the franchisee and allows them to use their name and trademark. In return, the franchisees pay fees or buy a minimum number of products This system is commonly used to market automobiles, soft drinks, appliances the third type is the Pure franchising which also called business format franchising this type the franchisor provide the franchisees with a complete business format, including a license for a trade name, the products or services to be sold, the store layout, the methods of operation, a marketing plan, and a quality control process this system is the most common and the most growing type compared to the other two examples of this type are like the quick service restaurants, hotels, business service firms, car rental agencies