All That You Need toKknow About Franchising and Franchise Opportunities
Franchising is proving to be the most resilient and effective way to undertake large scale expansions. Many corporations particularly those based in the U.S have undertaken significant expansion and to some extent diversification through this route. The fact that both the franchiser and franchisee have a stake in the success of the store or the outlet coupled with the fact that the appointed franchisees are usually indigenous people with good understanding of local laws; this coupled with the international and modern best practices of the franchiser enables scope for considerable synergy.
Franchise cost: Franchise cost generally depends on the following factors,
- Franchise fee: It is necessary to understand all services included in this fee, because some franchisers include land survey, expertise and skill development cost and their trademark and logo cost whereas some charge the franchise fee as a cost for just using the trademark and logo.
- Legal fees: Since the transactions are fairly large you would have to consult your legal team to advise you about UFOC (Uniform Franchise Offering Circular).
- It is important to understand that since every franchise outlet is different and hence there may be variation in costs.
- Working capital: As with any business it is important to keep your business well capitalized for day to day transactions
- Initial setup costs including inventory and supplies needs to be considered
Franchise Opportunities: As with any other business there are a lot of franchise opportunities depending on your budget, there are franchise opportunities which cater to a wide range of budget estimates and also cut across various sectors, so there needs to be a balance between what you like or desire and what you can afford.
Turnkey business: You can also buyout existing franchisee businesses for sale also called a turnkey business, this will help you circumvent the time and effort required to build from scratch. Moreover, you will have a ready workforce which is experienced. This type of franchisee opportunity of buying distressed businesses for sale and turning them around is fast gaining prominence in recent times, as it helps you to become a major player in the market in a short span of time.
The caution to be exercised in a turnkey business, that is buying businesses on sale, is that the franchisers generally have the first right to refusal and convincing them may be time consuming, and getting finances in such purchases can prove to be complicated than thought.
