Buying a Franchise: Everything You Need to Know
Buying a franchise is the perfect way to start your own company without having to start from scratch. You are able to use a tried and tested business model while benefiting from the years of experience and support of the franchisor. So, what does it take to buy a franchise? We're here to help you understand everything you need to know on your journey to becoming your own boss.
What Is A Franchise?
A franchise is the rights or licence granted by a company, commonly known as a franchisor, to an individual allowing them to market and trade products or services in a specific location which is often referred to as a territory.
Once the franchise has been bought, the individual, typically known as the franchisee, must comply with strict guidelines and regulations regarding the business in order to maintain the brand consistency.
Besides the initial fee, a franchisee will usually pay regular royalties to the franchisor in exchange for access to training, support or marketing assistance. The franchisee and franchisor will have a contract, known as the franchise agreement, where the partnership is tied for a predefined period of time, typically ranging from five to twenty years; these agreements can be renewed when the contract is nearing its end.
When you are considering buying a franchise, it is crucial to understand the type you want to buy.
- Product: In this agreement, the franchisee has permission to sell products using the brand logo, trademark and name.
- Manufacturing: Here, the franchisee is authorised to manufacture the company’s products and sell them using the brand name, logo, and trademark.
- Business: By far the most popular type of franchise, with this franchise model, the franchisee gains the licence from the franchisor to use their brand with regulations dictating how the business is managed.
Once you've decided which type will suit you, head over to a forum like Franchise Local. Browse through their range of businesses and opportunities, where you can find the perfect franchise for sale.
Advantages Of Owning A Franchise
There are many advantages of owning a franchise. One of the top reasons people choose franchising over starting an independent business is that the risk of failure is significantly reduced with taking on a franchise. The work of developing a brand, ironing out the wrinkles, and building a customer base has already been done, which gives the franchisee more time to invest in the business.
Most franchises have been in operation long enough to have the testimonies of many other franchisees as proof their business model is successful. Consistent results across the franchise locations will be fully documented and available to anyone looking to buy their own slice of the action.
Once a franchise has been bought, you are not left alone to your own devices to struggle and fail. There is always full initial and ongoing training provided to the franchisees in order to help them succeed; this allows the franchisee to access support during the initial set-up and future development of the business.
Working with an already established brand provides a franchisee with instant customers who are familiar with the business from other locations. It is also easier to gain a business loan from the bank when you are buying a franchise as they are seen as low-risk ventures
