While contemplating over the idea of starting your own business, franchising appears out as one of the suitable options to think upon. It has its own advantages that may synchronize with needs of today’s business environment. It is not like franchising is the only option available for those who determines to initiate a business, franchising is much feasible as compared with other preferences. One key reason behind it is that it gives opportunity to invest in a business model which is proven, shielding from all those risks that are involved in the initial stages of any business.
Moreover, we can say that in such a completive environment that lingers over Indian market, it is wise to keep oneself at bay, instead swirling among aggressive waves. It might have sounded harsh to you, but the reason we have mentioned it is due to emerging high impact of all the established brands, which are leaving no stone unturned to beat down its competitors. And your slightest of error in business management can lower your share of presence in the market. If you are not having any stable backup to deal with it at ease, your hard-earned investment might just wash away with the presence.
We are not saying this to de-motivateyour enthusiasm to start a business, not even doubting your entrepreneurial skills. Factually, every business comprises risk at some level, it is just in franchising intensity of risk condenses making it bearable for the investor. If you are not prepared to survive with huge risk at the outset, you can try your entrepreneurial skills by adopting a business model, which is nurtured by somebody else. By doing this, you can dodge the chaos which hits when begin from the scratch, and start away with good training and support provided by the franchisor.
Now coming to the question with which an investor struggles with while pondering to establish itself as a franchisee. The matter is where and in which brand to invest, besides his/her particular interest.
“Should I buy a franchise concept that has been established for many years or should I invest in a new ground breaking concept? Are my chances for success better with a large branded franchise or a company that has only recently franchised its concept?”
We will now elaborate the pros and cons of both the concepts to simplify your queries,
New concepts
Pros:
For franchisors who are new in franchise industry embrace all possible ways to attain success for their business. They remain extremely committed to their franchisees as failure will lead them down, hindering them to expand. Hence, they will certainly pay quality of attention to you.
New business allows franchisees to obtain territories that will yield more revenue. As most of time in an established franchise, prime locations are taken over within first five years.
You as a new franchisee can contribute a good share in the development of the new system.
As mentioned above, you can equip your entrepreneurial skills by sticking toa new concept as risk is a part of the process, and your personality will flourish in that environment.
Cons:
New concept may seem feasible to you, but it might not succeed in the area you develop. Hence, it involves more risk in these terms.
As you are taking up the franchise of new business model, then you will be the first to deal with them.
As the concept is new, lenders may find it skeptical, making difficult to obtain capital.
Well-established concept:
Pros:
You will get a chance to examine history of company’s revenues, litigations and failed franchisees will be there for you to investigate.
As brand is well-established, marketing will involve no extra efforts. It will already testified and successful.
The kinks will be worked out and your transition to ownership will be quicker and simpler.
Getting financing will be an easier process.
Cons:
As company is already having many other franchisees, you may feel left-out within the system.
The location where you want to establish an outlet might have purchase by somebody else, which can affect your revenues.
You may not be able to contribute to changes to the operation of the franchise system.
No matter what concept you choose, the prime focus of any franchisor is to make its franchisees successful for which they offer training and support. For most people getting a franchise, whether established or not, is convenient option to invest rather starting from the scratch. Franchisor helps you out with many things like location, established vendors, constant support.