In layman’s terms, franchising is duplicating an already existing business and system. Some people might not find copying an already established brand true to the spirit of entrepreneurship, but keep in mind that the success rate of franchising is at 90 percent, while that of traditional retail is only 25 percent.
So where do you start when it comes to franchising? What kind of industry should you pursue? What should you watch out for? Bing Limjoco, CEO of Francorp, shares a few insider tips us. You can click on a tip to learn more about it or simply scroll down and read on!
- Invest in the 3 Fs and the 3 Ts
- Do your research
- Trends come and go
- Be wary of hidden fees
- Everybody must win
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INVEST IN THE 3 FS AND THE 3 TS
The 3 Fs are food, fashion, and fun. On the other hand, the 3 Ts are transport, telecom, and tourism. These are some of the strongest money-makers in the franchising industry. Need proof? Just take a look at Jollibee, Potato Corner, Bench, and Bayo! These are just some of Francorp’s most successful clients.
DO YOUR RESEARCH
Even if people are raving about a particular business or establishment, that shouldn’t be your only reason for buying that business’s franchise. You have to do your own research and check whether the franchise is sound or not. Visit existing branches whenever you can, and ask other franchisees about the franchisor. The relationship between the franchisee and franchiser is very important; if a franchiser gets a lot of negative comments from his or her franchisees, it may not be such a good idea to invest in that franchise.
TRENDS COME AND GO
Such is the nature of trends. One example that Bing often uses is the sudden boom and immediate demise of the pearl shake business. A few years ago, these pearl drinks were all the rage. There was at least one stall on virtually every street corner,and in every mall. Fast forward to the future, and look how few of these stalls have remained. If you’re interested in buying a franchise, it might be best to stick with brands and concepts that have been tested over time.
BE WARY OF HIDDEN FEES
Buying a franchise does not come cheap, especially if you’re after the big-name brands. However, that doesn’t mean coming across a cheap franchising package is gold either. After all, the franchiser might tell you that he or she is only selling the franchise at P10,000, but you may find that, once you pay the fee, all these other expenses spring up, seemingly out of nowhere. You might be required to buy all the needed machinery from the franchiser, and who knows how much that might accumulate to? Before signing anything, make sure you know exactly how much buying a franchise will cost you.
EVERYBODY MUST WIN
Franchising should be a win-win-win situation. While the franchiser and you must earn well, your customers should get value for their money too. Otherwise, your business won’t last long. You might not even be able to get half of your ROI back! So don’t forget the formula. In franchising, everybody must win!
As with any investment, buying a franchise means taking risks. If you enter into it foolishly, then you’re almost guaranteed to lose all your money. So don’t think of it as the solution to all your problems. Most franchise stories are of the rags-to-riches kind, but they are not just fairy tales. They are stories of doing hard work, exerting a huge effort, and making the right decisions. If you want to succeed in this type of venture, as with anything, you must be prepared to put forth not only your money, but yourself as well.
(Photo source: sxc.hu )
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