Plan your finances before you launch a franchise business
Franchise Business
The trend nowadays is to expand business fast by launching franchise units in multiple locations at a fast rate. A small business that does very well and has the possibility of converting into a fixed format business can launch its franchise units. The objectives of earning franchise fees, royalties and growth look lucrative to all entrepreneurs. Few of them realize that it requires a lot of finance to launch one’s own franchise business. It takes money to invest in every stage. Right from working out a business model that will be easy to run at most locations to paying a consultant to market your franchise, everything has a cost. You may think that you don’t need a consultant but you will be convinced otherwise after investing a lot of time in it without significant progress. There are many other aspects to launching a franchise business but only the financial aspect is addressed here. Management expertise You may be very good at running your business but reworking it makes it more franchise-friendly requires a different skill set. When you are the owner, you feel www.frantastic.in
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free to make any decisions related to business. When a franchisee invests in a business, he will not have all that independence. His experience will also be limited and anyway, franchises are supposed to function in a prescribed way. Thus, the business will have to be converted to a fixed format business. To make this conversion effectively, one needs to work on everything from operations to marketing. You will need to decide even the color of uniforms worn by the staff. It sounds simple but those with experience can assure you that it is not so. The chances of going wrong are too many. Investment cost, viable marketing services, training, streamlining operations, supplies, coordination, and customer care may need major changes when you are ready to launch a franchise business. There is also the risk of these changes creating difficulties in the existing structure of the business. All the same, there can be much business to business solutions that may eliminate the major problems. It is better to hire the services of a management consultant who will help you to review and chalk out everything necessary in a professional manner. You will naturally want the best services and they are going to be a cost to you.
Legal expertise It will be virtually impossible to proceed with your plans in the absence of professional legal services. The attorneys will chart out the agreement that should be made between you and a franchisee. Such an agreement will include many aspects such as the number of years for the license to sell your products, roles, and responsibilities of each, percentage of royalties, limitations on the activities that can be engaged in, exit policy, etc. You will also need the lawyers to register your trademark, patents, and intellectual property rights. You will have to authorize the use of your trademarks once you issue a franchise to another businessman. The use of a trademark has to be limited to certain products or services and business only. Again these details have to be drawn out in a legally binding manner.
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As a franchisor, your obligations and those of the franchisee have to be defined clearly and mentioned in the agreement. There will be many such factors where you will need services from a lawyer who is knowledgeable and experienced in these matters. Marketing You will have to reach out to potential buyers for your franchise. An investor with the right experience and attitude that will make an ideal candidate is not easy to find. Though many first time entrepreneurs are considering buying a franchise, one has to be careful in awarding a franchise. If the franchise is not able to perform well, it brings a bad name to the business. You will have many avenues to advertise the availability of your franchise. You can advertise on your own company website, during trade shows, and advertise the business opportunity in newspapers or trade magazines. All these options are going to cost you and it is better to be armed with a budget in advance. In today’s age, digital marketing has an edge over all traditional methods of marketing. A vast market out there that is already looking for franchise business opportunities can be reached out with digital marketing. Social media campaigns targeting business groups, forums and local businesses can be targeted with an interesting and engaging design. This will build your brand too over a period of time. Many a time, businessmen have made the mistake of over marketing the opportunity to earn that they are offering. When a business is projected to earn a lot in a short time with little effort that is the kind of franchisees that will approach you. The more experienced and hard working candidates will pass over the offer as being too good to be true. It is difficult to achieve a balance between reasonably feasible and extremely hard to manage.
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Franchise business
Marketing through content with the use of branded keyword search, and location-specific search in popular blogs and business portals can also further your objective. Again, these efforts have to be consistent and very well organized with search engine optimization. This service needs an experienced team and you will need to mark a part of your budget for it.
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Franchise consultant On checking online, you will be able to find franchise consultants who offer to guide you in your search for a franchisee. They offer a whole bouquet of franchise-related services. Right from perfecting your existing model to make it more franchise-friendly to arranging an interview with a prospective franchise candidate, a franchise consultant will help you through and through. Though there are many such consultants, you will need to engage the services of one who will be able to market your franchise in a strategic manner and actually bring in the kind of franchisee that can make your franchise a success. Though many consultants will offer their advice for free, you will have to pay a fee to them for every entrepreneur that you are able to convert to your franchise. Though expensive, you will find this way of spreading the word about your business and making a deal with entrepreneurs who show promise, easier than struggling on your own. Investment Many investors think only of the franchise fees and royalties to be earned from a business franchise. They forget that apart from the costs that we discussed above, there are ongoing costs in a franchise business. It is the role of a franchisor to ensure good marketing of the franchise business centrally. There are also other responsibilities like training, handling accounts, running a customer care center, and operations if you are supplying a semiprocessed or ready product to the franchisees. To increase the scope of your functions is going to need investment for human resources, working capital and infrastructure. This investment can be tricky to plan. It depends on how fast you are planning to expand through new franchise units. If you are going step by step, you need to plan a slow growth of services allied with the business and if you are confident of opening many franchise outlets at a time, you have to plan accordingly. Thus, it is advisable to assess the finances that are going to be necessary to fuel your expansion plans. If you have a clear idea of the investment required, you can approach investors or a bank for a loan. Once you have your finances in order,
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you will be unstoppable in your quest for entrepreneurs who will boost the growth of your business.
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