Buying A Franchise Business: How To Know If You’re Ready

Posted by under Business . Updated: August 30, 2016

One question that people often ask me is how do they know if buying a franchise business would be better for them instead of starting one on their own.

Some fear that they don’t have enough skills to start a business alone; while some don’t really want to spend time developing a business plan and just wants to jump right into entrepreneurship.

While both are valid reasons for choosing a franchise over a start-up, there are other things you do need to consider before you approach any business franchisor.

Here are some facts and pointers you need to remember when you buy a franchise business.

Limited Risk

Acquiring a franchise limits your risk of failure because more often than not, a franchisor already has a successfully proven system that will attract profits to the business.

Indeed, for those who are not comfortable (or just plain lazy) to develop their own business plan for a start-up, buying a franchise business would be a better alternative.

No Experience Needed

Another great thing about being a franchisee is that you don’t need to have experience in running a business to start. Your franchisor will almost always teach you everything you need to know on how to manage and operate the business.

Sounds convenient, isn’t it? It is but you have to prepare yourself to be trained and consequently, be ready to teach everything you learned to your employees.

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More Expensive

Buying a franchise business will cost you more money than starting a similar business on your own. If you want to become a franchisee, you should be comfortable with paying not only a franchise fee but also, a possible monthly royalty fee to your franchisor.

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Follow The Manual

All franchisees are expected to operate the business in exact accordance with the instructions of the franchisor.

You need to “follow the manual” of the business system which includes doing all operational tasks to the letter, purchasing your inventory from the suppliers directed by the franchisor, accomplishing all forms given to you by your franchisor and many other tasks and responsibilities.

No Extras

All branches, whether company owned or a franchise, are expected to serve the same products and offer the exact services. You will not be allowed to sell anything else other than what your franchisor provides.

This means foregoing on opportunities to offer your own items in your store. If you have an idea for a new product or offering, take it up first to your franchisor for approval and let them develop it for you.

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Shared Success

Becoming a franchisee means you are willing to share your success not only with your franchisor, but also to the other franchisees as well.

The success we’re talking about here, more than anything, refers to the profits you will enjoy in the business. Expect a part of your income to go to a common fund that will be used for marketing, research and development of the business.

Part of the Family

Buying a franchise is like becoming a child in a family. You are expected to do your chores and responsibilities while your parents… your franchisor – works for your development and success. It is a long-term relationship; and you must be willing to do your part to help the organization continually grow and thrive as a business.

If you fully understand and accept all these facts about being a franchisee, then you may have found your path to business success. Consider consulting a franchisor and see if you can find a good opportunity for you.

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Photo credit: kaptainkobold and ltdemartinet




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7 Responses to “Buying A Franchise Business: How To Know If You’re Ready”


  1. Rob says:

    Sir Fitz,

    Can I add you to my blog roll?

    Filipinos should be financially educated!

    Thanks

  2. Fitz says:

    Of course Rob. Thanks!

  3. Garrett Miller - Young Entrepreneur says:

    You make some great points here Fitz… A lot of people are interested in buying a franchise, but many are uneducated about some of the things you mentioned here. Thanks for doing your part to raise awareness!

    Garrett

  4. dreamer says:

    hi, i would like to share our experience or if I may say bad experience in franchising. My family decided to franchise a 24 hr. burger chain ( wait a minute…). At first they will tell good things about their company, that all of their store have a daily sales of 10,000. But when we started our operation we didn’t even hit the sales they are talking about. To our surprise when we asked some of the franchisees they told us ” hayy naku yan din ang sabi nila sa amin un pala 3T lang ang benta ng stores nila!”
    Lesson learned: investigate first, ask the existing franchisees and not the franchisor coz they will not tell you the truth.
    i hope our government will look into dis matter coz most of the victims are OFWs who worked hard for their capital, like us.

  5. […] Buying A Franchise Business: How To Know If You’re Ready […]

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