Updated on April 24, 2020
7 tips to help you open a franchise
Opening a franchise is not trivial. It requires time and patience and a number of aspects that you must complete perfectly in order not to fail. Therefore, we offer you basic tips that you must know before becoming an entrepreneur and opening a franchise and that you must overcome if you want to run a profitable and successful business. 7 tips to help you open a franchise:
1. Self-evaluate our qualities, skills and abilities
If you have already made the decision that the best way to start a business is under the franchise formula, the first exercise you have to perform is a deep personal self-analysis that allows you to know if your qualities and abilities are the ideal way to become a franchisee. The first of the guidelines to be defined when starting a franchise system is to want to enter the business world with all that this implies.
Make sure that your personal characteristics and circumstances are the most appropriate, as well as your financial and personal situation, professional skills, etc. Look for your family’s support, as you will need to feel constantly supported throughout the process.
Know your investment capacity, if you need facilities, if you are willing to follow the guidelines set by headquarters, if you are looking for more than economic benefits, if the franchise you want exists, etc. Also consider the consequences in all areas if the business does not work as you wish. An honest answer will allow you to see more clearly whether your particular attitude and circumstances are those necessary to join a franchise.
2. Knowing our investment capacity
Before selecting how you will finance your franchise, it is vitally important to develop an economic plan that clarifies how much money you need and how much you have… in other words, developing a financial plan is vitally important when you want to open a franchise, because you must have well connected all the economic and investment aspects.
It is essential to have a clear understanding of our initial investment capacity. Many franchises fall when the financial situation is not completely accurate and stable. You must know with complete certainty where the funds will come from; loans, savings, family, other partners’ capital, etc. You should also consider how this money will be paid back or returned (including interest) once invested.
In the beginning you have to minimize the expenses as much as possible. If you have to go to the financial market for investment, compare the different interest rates and select the lowest that offer the best payment facilities. Getting into debt implies a great responsibility, so you should have time to look for the best financing alternative and, before applying for a loan, make sure you will be able to pay it back in due time. Don’t forget that when you start it is necessary to do it with enough margin not to drown in the first few months.
3. Knowing the sector we want to dedicate ourselves to
Not only is it necessary to know the general aspects to set up a franchise; qualities, capabilities, investment… Another fundamental step is to know in depth the sector to which we will devote ourselves. Although there are sectors that have developed great expectations and generated a very positive evolution, efficiency is mainly due to each particular brand. It is not rare to discover sectors made up of several franchises, in which only a small number of them offer serious chances of success.
So study, read, analyze, one by one and in depth each badge, and you will see how you will find considerable differences between franchises in the same sector.
Clearly, the strength and reputation of a franchise is a valuable guarantee of success, but also learn about the various brands that are still in their early stages and that are delivering significant amounts of innovation, originality, invention, improvement and enhancement, all with extraordinary results.
4. Obtain information about the chosen franchises
The next step is to obtain the necessary information from the franchises we have selected for a possible investment. Get to know all the peculiarities, operations, risks, commitments, opportunities and essential elements included in each of these franchises. It is not superfluous to have the support of a specialized advisor, both at the beginning and during the process, who has exclusive knowledge of the brands.
Knowing in depth what the franchise can offer us as future entrepreneurs is not complicated. Today, the market offers a wide variety of: franchise guides and directories, specialized magazines, specialized portals, franchising and entrepreneurship fairs, seminars and specific franchise presentations, multiple sections dedicated to franchising in the general and economic press, blogs and social networks…
As if that were not enough, major consulting companies such as BeFranquicia are ready to help and inform, some of them with national coverage. In short, franchising is part of the business, economic and informative activity, being present in all forums and business areas.
5. Study the market in which we will operate
You must know your customers, suppliers and of course the competition to make your business more competitive. Listen to your environment, offer your customers what they need, create profitable relationships with suppliers and study the strategy of your competition. Customers are the basis of your franchise, if you don’t listen to them the competition will and you will put on a plate the transfer of your market.
In this way, knowing your customers, suppliers and competition will be essential to make your franchise competitive and take control of the market. Likewise, participation in events, fairs and franchises is an excellent idea for recruitment, besides books and seminars that allow you to generate strategies to be implemented in your business.
In short, analyze the internal characteristics of both the business and the market in which you intend to invest, taking into account the degree of adaptation to it of our personal and economic profile. A successful and profitable franchising business will only take place if we know the market and our competitors.
6. Talking to franchisees
When selecting a franchise, it should not be sufficient to rely solely on the documentary information provided by the franchisor. You have to contrast this information with other franchisees in the chain.
With their experience, they will provide you with very important details about the management control by the central franchisor, the help in solving the problems that can be generated, the ability to communicate and execute animation actions, marketing, actual monitoring of the network, among others.
Do not hesitate, if you have reached this step, call the franchisees who have invested before. This does not mean talking only to the successful associates recommended by the franchisor, but also sharing information with the franchisees who are having problems, and trying to find out why they are not doing well, not to make the same mistakes or simply discard the franchise.
7. Seek professional advice
Finally, unless you are an expert, it is virtually essential not to have professional advice from expert franchise consultants. One example is the consulting firm BeFranquicia. Thanks to their services, they will provide you with an objective assessment that will help you make the most appropriate choice for your particular case. Take all the time you need to corroborate what they tell you.
One of the most important aspects is the contract. This will regulate the rights and obligations of the franchisor and the franchisee for the entire duration of the relationship. A review by a professional specialized in franchising, before signing it, is the best formula to avoid unpleasant surprises in the future.
The contract must regulate the conditions under which the franchisee is authorised to use the franchisee’s trademark, the transfer of know-how and the commercial or technical assistance to be provided throughout the duration of the contractual relationship. The analysis of each franchise contract must, logically, be individualised, but aspects such as non-competition, assignment clauses, offers and supplies… may be an approximation of the subjects on which professional advice is required.