Before buying a franchise business, there are several things you need to know and consider about franchising. First, a franchise is a legal and business relationship with the owner of a trademark, advertising symbol, trade name, or service name and an individual or group desiring to use the businesses products, services and techniques for a percent of gross monthly sales and a royalty fee.
There are several factors that need to be considered when thinking about purchasing or making your own business a franchise.
Demand
Is there a market for this product or service locally? Is this a seasonal product or service or does it have a continuing demand? Will it have repeat business? These are just a few questions you need to consider for the demand of your business.
Competition
Is this going to be on a local or national level? Are there many of these franchises to compete with on the market? If so, are they well established in their field? Do they offer the same kinds of service and product but at a lower/higher price?
Name Recognition
One of the main reasons to go into franchising is to have the name recognition of the product and services of the company. The more widely known the name is to people; the more likely customers will know the product and services and purchase them from you.
You also need to consider how widely the name of the franchise is locally and nationally. Is it a registered trademark, service mark or symbol? Has this company been in business for a while and is established or is it new? What kind of reputation does it have or are there any complaints with the Better Business Bureau? Do they offer training and support for their franchisees?
Franchisors Experience
Do you feel that this franchise has enough expertise in order to make you feel comfortable? Has it been around for a while and achieving good status?
Growth
Having a growing franchise system will increase the name acknowledgment. Plus, it may attract new customers. Expansion doesn't always mean success. If a franchise grows too quickly, then it may not be able to support all promised products and services. It also needs to have adequate financial assets and staff for sustainability.
These are just several things to consider before purchasing or making your own business a franchise. Take a moment to look into these matters with the help of a consultant.
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