Anyone choosing to start a business is taking it upon themselves to begin a difficult journey. Especially in times of such political and economical uncertainty, starting a business may be appealing but still a scary process. This is where the benefit and ideals of a franchise business can help you fulfill your business aspirations.
For that reason, if you’re thinking about setting up a franchise, here are a few things you need to keep in mind in order to be successful.
What is a Franchise?
A franchise business occurs when an individual or group are given the rights to use a business logo, model, or similar of a bigger company. Typically, this occurs if the larger business is a multinational company looking to expand into a new country. In basic terms, a franchise is basically the extension of an already existing business.
What’s the Process?
In order to set up your own franchise business, there is a typical fee in place for rights to their business, equipment, marketing methods and even the methods they use. This all has to be paid for up front by the hopeful franchise owner – then also renewed every year in some form of royalty payments (which is calculated based on the sales of the franchise). This may also cover the franchise rights for a specific area or location in which the franchise operates – which could be anywhere within a certain distance of another location. And does so as the only one of its kind in the area.
This agreement tends to exist for a substantial period of time, typically around 10 years (depending on your mediation solicitors Manchester negotiations). It’s important to remember that you are never outright buying anything from the business, simply the right to use their names and similar. So remember this before making such a commitment – as you may find yourself starting from scratch once the agreement comes to an end.
Pros and Cons
Of course, as with any business venture there is a level of risk. There tends to be pros and cons with anything work related. One such issue which is both a pro and a con is the fact that you are only buying the rights to a franchise. This is a pro because it means you have an established model which works, as well as a long line of already loyal customers (presumably). Whereas, it is also a con as it’s not your own business and therefore you could lose it given a change of circumstances (or should your contract not be renewed at the end of a given period).
However, there are also some things which act as both a definite pro and a definite con. Such as:
- Franchise support.
- You benefit from the strength of a franchise brand.
- Lower inventory prices available from your franchise.
- Staff recruitment may be easier if people recognise the brand.
- Starting costs can be high.
- Royalty payments on a yearly basis could end up being difficult to pay.
- Less creative freedom to make the brand your own.
- Support varies from franchise to franchise, so you may not get everything you need.
On the whole, starting a franchise business can be both financially rewarding and difficult if it goes wrong or your contract fails to renew. But it is worth considering both the positives and the negatives in order to decide whether or not this is the best business decision for you to make. If you don’t, then matters might take a legal turn and you could find yourself in the need of contentious probate solicitors. Or if, perhaps, something else might make more financial sense.