3 signs that you are ready to own a franchise

International Franchise Association defines franchising as follows:

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising.

Owning a franchise means buying into a system that comes with training and support. In your role of a franchise owner, you will be running a business and executing the franchisor’s system as they have laid it out. Successful franchisees also add their own to the brand but at the end of the day, it’s a shared brand, so when the customers walk in, they have to understand that it’s the same brand, so you have to ensure the same quality of products and services in your location.

The franchising process starts with you and your research and ends with a big and detailed contract that determines your rights and obligations over an extended period of time. There is room for negotiation in any franchising deal but once the contract is signed, everything becomes final. Franchising is an adhesion contract meant to be uniform among all of the franchisees entering the system at the same time. So before putting your signature in that contract, make sure that you have conducted thorough due diligence about the franchisor’s offering, you’ve compared it to other offerings in the same industry and you’ve consulted with a professional consultant.

Similar to other investments or methods of becoming an entrepreneur, franchising also requires research, analysis and weighing of pros and cons. For some, franchising is a relatively easier and faster way of owning a business, which already has a proven business model and reputation. For others, it is not the right move as it doesn't entail full autonomy. As a franchise owner sometimes you may not agree with but will still have to follow the franchisor and their decisions.

Here are three signs which indicate that franchising is the right option for you:

*You want to learn while running your business *

One of the key advantages of franchising is that the franchisor provides ongoing support to the franchisee. Before you can open the branch in your location, you have to pass training with the franchisor. Some contacts may even have a clause which states that the contract may be terminated if the franchisee can’t pass the training course. During the training, you will learn about the company and get an insider’s look into its operations. You can ask questions and understand how the franchisor wants you to run the business. They will give you the overview not how to run your day-to-day business, that’s up to you to organize and execute.

So, as an owner of a franchise, you get an experienced entity and a group of people to guide you to success. Having that support is basically your safety net, so you can learn and experiment as you go. Franchising also allows you to look into and learn about the different aspects of the business from customer service to operations and finances. You may need to step in and take over multiple roles.
Franchising is an excellent opportunity to learn and become an experienced entrepreneur.

As we have already mentioned on multiple occasions, being a franchise owner comes with semi-authority, so to speak. You can still call the shots and run the business on your own but you are also responsible and accountable to the franchisor. You are a part of a bigger brand and sometimes you will need to take orders from the headquarters. They are giving you a ready-made business model, a reputable brand, and even a client-base, and in exchange, you need to comply with their standards and requirements. As a franchisee, you will also need to report your sales and expenses to the franchisor.
The franchisor will have specific requirements for you such as adherence to marketing guidelines, suppliers, choice of location or what specific products or services you must offer. All these requirements will be communicated prior to signing the contract, they will also be underlined there.

You may also have restrictions on how you can and cannot use the franchisor’s intellectual property. This is part of the deal, so if you don’t mind being a part of a bigger organization and taking orders from it, then franchising is a valid option for you.

You can, of course, invest in one of the top franchises like McDonalds, KFS, Marriott Hotel, Subway, Domino’s etc. but if you have limited resources, you will most likely opt for a smaller one. If you are okay being a small business owner for a while until the franchisor grows then do look into franchise opportunities in the field of your interest. Keep in mind that being a franchise owner instead of an employee means giving up the benefits of the latter such as retirement plans, stock ownership and option plans, paid sick days, paid vacation days or health, vision, and dental insurance plans.
Becoming a franchise owner brings other benefits that are very tempting, so it’s up to you to make a decision.