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Guidelines in Franchising

In this section of Franchisee Wanted.Com, we have some points, which may assist and guide you as a means of starting a new business, expanding the existing business (for franchisors, dealers, distributors and C& F agents). We hope you will find these points as guidance for your business: -


    (1) Is this for you?
    (2) Collect information about franchisor.
    (3) Conduct survey of the market.
    (4) Critical analysis of the franchise agreement.
    (5) Arrange adequate funds.


  (1)  Is this for you?

Take sufficient time to consider your own strength and weaknesses before you start serious discussions with any franchisor. You can ask yourself the following questions, which you have to answer thoughtfully. What do you want to do? Do you have sufficient funds?, Are you ready for taking risk?, Can you manage people? etc.

  (2)  Collect information about franchisor:

You should collect information about franchisor. You can talk to friends, other franchisees or a franchise consultant for collecting information about the franchisor. You should have at least the following information about franchisor :-

      (a)  Franchisor's business experience and reputation in the market.
      (b)  Franchise fee and other initial cost.
      (c)  Detailed information about products and services offered by the franchisor.
      (d)  Area, territory or city for which the offer is given.
      (e)  What marketing and advertising support franchisor provides?
       (f)  What kind of property or space is required to do franchise business?

   (3)  Conduct survey of the market :

During conducting market survey you should consider the following aspects :-

      (a)  The demand of the product or services of the franchisor in your territory.
      (b)  Whether the demand is stable or not.
      (c)  Know about the competitors present in the market, their strength and weaknesses.
      (d)  The price of the product or service offered by the franchisor should be consistent with average income of the people in your territory.
      (e)  A franchise that is a success in Chennai may not be necessarily successful in Delhi, therefore carryout your own market survey to satisfy yourself before making any investment.

   (4) Critical analysis of the franchise agreement:

Before entering into agreement with the franchisor, you should obtain a sample copy of the franchisee agreement. Now you should study the agreement thoroughly, if required take the services of a lawyer or consultant.

   (5) Arrange adequate funds :

 When you decide to go for franchise business, you should arrange adequate funds required for the following cost items :-

      (a)  The initial franchise fee: - This will depend on the structure of the franchise package. This fee is paid for start up, initial training and for goodwill of the franchiser.
      (b)  Capital Investment: - This is required to purchase equipment and furniture for franchise business and designing, decorating the premises.
      (c)  Working Capital: -Working capital required for inventory, employees' salary, franchises continuing fee, debtor's etc.


If all the above are setup, now you are ready to take franchise. To assess yourself and your franchisors our checklists may be helpful.
Go for it, all the best from the entire team of Franchisee Wanted.com.

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