With the growing Indian economy and several initiatives from the government, the prospects for franchise growth in any industry have significantly improved. Whether it’s a food, apparel, healthcare, or automobile franchise, they all have been growing exponentially, providing great return to its investors and the owners.
While you may be planning to own a franchise and doing some analysis of a specific industry, you should be aware of the franchising industry and its pros and cons.
There’s no doubt that owning a franchise can certainly lower the risk of business failure, but it’s important to note that success is not guaranteed (it is true in any kind of business).
Since the pandemic, we have witnessed numerous brands selling their franchises at very early stages, where the franchisor hasn’t provided adequate support to the business. Investing in such franchises may not only destroy your wealth but also cost you your most productive period, leading to financial issues and more.
Therefore, I request you to go through this informative piece, before you buckle yourself up to OWN A FRANCHISE. I will try to make it short, but if you need a detailed post, you can comment.
Table of Contents
Who Should own a franchise?
Every business requires a certain set of skills and operating them on a large scale necessities experience and brand presence in the market and much more.
The main part of franchising is definitely associated with the reputation of the brand and its owner carries, and any short of issues at the top-level can eventually disturb the overall business (Prime example is – MBA Chai Wala, and Idli Guru Fraud).
As you know, Franchising involves franchisor(sells it) and franchisees(one who buys it). But before you own a franchise, you should certainly have these skills.
Entrepreneurial mindset and Risk-Taking capacity:
Whether you start a business or plan to obtain a franchise, you should have an entrepreneurial mindset, and without this, you cannot succeed. A perfect entrepreneur should be self-motivated and self-starters who passionately wants to build and grow a business.
In addition to this, like every business, franchising also involves a certain percentage of risk, and you should be definitely ready to take up that risk.
We also have some plans to mitigate/avoid this loss, which will be covered in the separate article.
Check out more: International Franchises, Business Ideas, and Apparel Franchise
Ability to understand the business and its growth prospects
If you are someone with a fresh entry in the business segment with no business background, you should primarily obtain a skill to understand your desired business and its growth opportunities.
Now, the obtaining any skills takes enormous time and some truly field work, you need to make your hand dirty and then only jump into any conclusion. A great business analysis will cover the segments like business category, its competitors, market potential, marketing, management, and much more.
Every business or franchise has its pros and cons. Noting them down during your analysis phase can guide you make an informed decision during difficult period.
Knowing required franchise costs and models
For any segment, there could be numerous franchises asking for handful some of investment for their franchise, which may not be worthy. Therefore, you should be truly aware of the average cost for the desired franchise business.
It may also be true that established franchise may ask for significant investment, but you need to have the negotiation skill so that you can lower down the cost. Or, you can also ask for if they have any smaller variants of their franchise operation.
Before taking up a franchise, you should be aware of the initial costs, ongoing fees such as royalty fee and marketing fee. Apart from the initial investment ask, a perfect franchise aspirants should also have a few extra investment ready.
Additionally, you must have at least 3-5 brands on your list in your desired business category. Conduct competitor analysis, assess market presence, review owner’s background, and track record of their existing franchise units.
Check out: Here are the list of Royalty free franchises
Demand commitment and dedication
You can’t attain success overnight that too without paying dedication and commitment to the business. With every single penny invested in the franchise, you SHOULD be ready to do hard work or even long hours on busy days.
Though not every franchise asks you whether you are passionate for their industry or not, because after all they need to sell more and more franchise units. But if you truly want to make a wealth out of it, dedicate your precious time to it.
Ability to follow franchise systems and standards
As an approved franchise, you are advised to follow the certain franchise-related guidelines and their mentioned procedures. You can’t sell anything of your own. The franchises thrive on consistency and you should be comfortable adhering to their standards.
Necessary to have long-term vision
Businesses takes time to grow and a long-term visionary founders have excelled their game and taken their entities at an unprecedented level, and there are several examples of it such as Rameshwaram cafe, Reliance, DMart, KIA, TVS, Tata 1MG, Amul, and many more.
Therefore as a franchise enthusiasts, you should primarily focus on the market reach, its potential to grab larger customer base, and ability to forecast the franchise growth and upcoming opportunity in the given period.
Who should certainly not buy or own a franchise?
Absolutely, it is needed to understand like we mentioned certain set of candidates who can actually go ahead and buy a franchise, but we need to also pin-point the candidates who shouldn’t and must not indulge in any franchise.
Actively looking for Quick rich scheme
legitimate franchising and businesses aren’t any quick rick scheme. It demands real money, your time, dedication, and commitment that can generate a significant return over a period.
Also, you should stay away from it, if you are thinking to generate wealth in few days. It is also not mandatory that your store can garner customers from day one. That’s why you need to conduct proper market and area analysis before taking up a franchise.
No business experience and taking high interest loans
If you don’t have any background experience in business and are planning to take loan from the bank at higher interest rate, you should right away avoid it. You are making blunders here, just AVOID IT.
Best solution: For fresh candidates with no business exposure, start up your own business, understand every basic principle about it, and make it large. Or, if you are passionately looking for a franchise, take up a low-cost franchises with no royalty fee.
The Editor’s Thought
Obtaining and operating a franchise on a larger scale requires skills and expertise in the specified industry. While the growth prospects of overall franchise businesses seem promising, it’s important not to succumb to any hype.
A great entrepreneur should always follow a defined procedure to own a franchise that includes market and brand analysis, reviewing owner’s background, franchise’s presence in its own category, and growth rate of their existing franchise owners.
Finally, if you are looking for franchises from certain industry, here are the lists,
You may consider checking these categories:
Tea & Café Franchise, Ice Cream Franchise, Food & Beverages, Delivery, Dealership/Distributorship,
Affordable Franchises, International Franchises, Business Ideas, and Apparel Franchise
FAQ
Should I Own a franchise in 2024?
Given the bright future growth prospects of Indian economy and growing average income, owning a franchise can certainly proof your investment work. But you need to make sure that you partner with established chain.
What’s the expected margin in a franchise business?
The expected margin varies on numerous factors, but you certainly shouldn’t expect a fortune. On an average, a food franchise yields a net profit margin of approximately 10-15%.
