Basics Of Buying A Franchise Business In The United States Owning a franchise in the United States is a great way of starting a business. It is a lot less risky as compared to starting a new business from scratch, and comes with a number of benefits too. Not only do you get to work on a ready-to-use formula, but the branding is in place as well. There is a certain degree of brand awareness and a loyal customers base that can be tapped by applying the basic fundamentals of doing a business. In addition to that, you also get experienced support from the franchisor that can come in handy in kickstarting your business and help you guide through tricky situations. But there are a few things you must know before buying a franchise. Here are the basics of owning a franchise To do business under the franchisor's name and system, a franchisee must first obtain permission to do so from the franchisor, who is the owner of the business/trademark. A franchisee must also pay a royalty and initial fees to the franchisor in exchange for the permission to do business under the franchisor's name and system. The differences between having a franchise and owning a chain are significant. Despite the fact that they seem similar, there are some significant characteristics that distinguish a franchise from a chain as distinct business idea. If you are clear about owning a franchise, here’s what you must do: Make a clear decision: Whether you start a new business, own a franchise, or become part of a chain, it requires a lot of physical, emotional, and financial investment. So, you must make sure that you want to dive into it. Even though owning a franchise is considered a lot safer than starting a new business, it comes with a lot of responsibilities, challenges, and a certain amount of risk. You must be 100 percent sure that you want to do this before you start investing. Do thorough research: A popular brand doesn’t always guarantee a successful franchise business. So, you must do your research before finalizing a brand. Things you must look out for include:
Sales track record of the brand It should be a part of a growing market Look for local competition. Little competition is good, too much is too bad The franchise brand should have repeat customers Ensure how much initial fees you are required to pay and what are the terms of royalty
Get to know the franchisor well: Before things start taking place, a meeting between the franchisor and the franchisee is held – known as the Discovery Day meeting. This is done to know each other well and ask all the relevant questions. Be attentive to what the franchisor has to say, see how you feel about the organization, and observe critically if you would like to do business with the franchisor. These are critical points to remember before jumping into the business.