For many entrepreneurs, opening a franchise is a great idea. By opting for this formula, professionals do not start from scratch, since they take full advantage of the parent company’s reputation as well as its products and services. However, we must not start with our heads down. Franchise investment requires prior studies and analyses. Details.
Choice of sector of activity and market research
Opening a franchise begins with choosing the industry in which to operate and make a profit. There are indeed several: beauty and well-being, trends and fashion, food, perfumery, pastry… The choice of franchise is preceded by a rigorous market study. In other words, the entrepreneur aspiring to the success of his franchise project must first try to know the real expectations of potential customers in the desired catchment area. It is also necessary to assess the purchasing power of the population. The market research also focuses on the nature of competitors’ products and services in its catchment area and on customer satisfaction with their services. Once all this is done, the entrepreneur already has an idea about the franchisor with whom to work. It will have at least a clear idea of the franchise sector in which to evolve according to the needs of the targets in its geographical area of implementation.
Budget and financing plan
A franchised business is entitled to the products, services, reputation and business management techniques of the chosen franchisor. While the support is free of charge, expenses relating to installation and administrative and legal procedures are nevertheless to be expected. The contractor will be required to pay entry fees and royalties. The amount of these sums varies according to the franchisor, the chosen sector of activity and the legal framework managing the market. It is also necessary to provide a certain budget for the rental of the adapted premises, the installation, the administrative procedures… Obviously, the individual who wishes to become a franchisee has a certain budget at his disposal. With the preliminary study of the necessary expenses, it is determined as to the amount of the amount to be borrowed from banks and similar financial institutions. It can also count on the support of the parent company to obtain a bank loan.
Analysis of the clauses of the contract and the franchisor’s requirements
How to become a franchisee? – A good market research and an analysis of the necessary budget are essential steps. In addition, it is important to check all the requirements of the chosen parent company. This concern, for example, the type of suitable premises, the standards for the presentation of products and services, the system for responding to customer requests for information, etc. In short, these are standards and criteria that must be strictly respected in order to better convey the parent company’s brand image and allow it to develop successfully as well as its franchise. The contractor verifies whether it is able to meet these requirements before opening a franchise. In addition, it is important to analyze one by one the contract clauses defined by the franchisor before signing the franchise business agreement and thus evolve in this sector of activity.