Franchising is one of the most appealing business models currently. Many business newcomers are likely to choose to purchase entering a franchising contract with high-quality firms like XIMIVOGUE, McDonald’s, and Subways.
It certainly is an excellent way to start your business journey, with some primary advantages a franchise can offer. For instance, training and on-site assistant managers can be provided by franchisors, so there will be more opportunities to learn while reducing chances for you to make mistakes. More importantly, the business model is proven to be successful by other fellow franchisees; therefore, the possibility for you to fail is also minimized.
Everything sounds like a dream, right? However, it is not as easy as merely dumping money into the firm, and then more cash will automatically come back to your wallet. You have to pick what is right for you carefully. Below are the five sources that you have to research thoroughly before purchasing any franchises.
1. The franchisor
The first source is obvious – the franchisor you are interested in purchasing. The entity will usually provide you with their financial information as well as their franchise disclosure document. Sometimes they also offer promotional materials and testimonials to raise your interest level further.
Salespersons typically propose a process where both you and the company can learn more about each other. During this phase, you should take advantage and ask all questions in your mind to fully understand and evaluate the situation.
Furthermore, you should also be critically assessing the business and make any decision rationally. The decision should not be made only based on your interests and hobbies. Put more effort into researching whether the firm and the industry have the potential to thrive.
Besides the company you are planning to purchase, their competitors should also be on your research list. Visiting neighbor areas for contenders that are either independently owned or a franchise to find out how your local market is doing. You can take notes and create a profile of their customers, as well as using tools and information online to find out their strengths and weaknesses. Moreover, go to their shops and talk to their staff. The information you can get from them may surprise you, and more valuable insights are gain via this process.
The overall goal here is to compare as many aspects as possible to your competitors. Some management methods may be useful, and you can adopt those processes to your local franchise store.
3. Industry Association
Understanding the surroundings and overall market performance is crucial in ensuring your success. Information can usually be found on the internet, such as the growth rate of the industry as well as forecasts from third parties. Such statistics are essential to analyze the situation and provide the basis for your decision. However, an experienced business person will tell you that it is merely historical data. While it is reliable, you should not entirely depend on these reports.
4. Franchise broker
Speaking for providing professional insights and forecasts, a franchise broker can guide you in selecting the most suitable brand. A broker is trained to help a prospective franchisee to narrow down their choices, and during this process, you can ask them questions that may concern you.
Typically, the service is free. The consultant fee, as a commission, is paid by the franchisor. Ultimately, this source is a great channel for some genuine information. However, you need to be careful that they are not operating without any biases, and you should identify if you are in the right and rational direction.
5. Trade show/Industry show
The last great source to acquire information is trade shows. Franchisors typically present in various exhibitions over the year. For instance, XIMIVOGUE participated in the China Import and Export Fair (Canton Fair). They showcased their products, favorable franchise policies as well as held conferences that engaged with potential investors.
In addition to being an important chance for you to talk to franchisors directly, you will be able to meet other companies that slip your mind during your initial research. Furthermore, there are seminars where you can understand more about specific industry trends, contract provision, and external financial support opportunities. The value you gain generally outweigh the costs, and it will be worth attending as a potential franchisee.
These five sources can provide you with immensely helpful information. Once again, if you are investing money into a franchise, make sure you understand both the benefits and the risks you will be getting. Although these top five channels can already offer you with a comprehensive understanding of the franchise, you can also acquire more data and materials that are useful for your journey beyond these five sources.