In times of economic uncertainty like the current one, many of those who dare to make the leap into the business world tend to think that the franchise is a safe value. They are well-known brands, they have popular acceptance and a good part of the marketing and promotion work we have done right from the start. With these wickers, it’s easy to think that if we try hard, nothing can go wrong. However, before launching into the world of the franchisee there are a number of factors that we should take into account.
- Choose a franchise that suits you
We all more or less agree that large franchises, those that are known around the world and enjoy great popularity, are a priori a “safer” bet than those that we have hardly heard of.
Not only do they have a greater ability to attract customers by themselves (not to make a profit), but they tend to offer better support and technical advice. However, the other side of the coin tells us that these large franchises tend to be much more expensive and demanding, so it may cost us more to make the first years profitable.
- How much do we have to invest?
Knowing from the first moment how much the initial investment in our franchise can cost us will define our options, and it will place us in a much more realistic way in the market. Giant franchises like McDonald’s can mean an initial investment of more than a million euros , while other more “modest” and little known to the general public can be saved with an investment of just under 10,000 euros.
- Know the conditions
Beyond the initial investment, many franchises usually require us to buy our supplies from certain suppliers , who usually obtain exclusive treatment.
On the one hand, this can benefit us, because our franchise may have reached agreements with suppliers so that supplies are not cheaper but, if this is not the case, we may find ourselves tied to a supplier that does not convince us and that we it imposes higher prices than those of the competition.
- Make sure you are the “owner” of your neighborhood
One of the worst things that can happen to us as franchisees is to discover how, six months after opening our business, another of the same franchise opens just a few streets away, in our same neighborhood.
How can we prevent it? The only “magic recipe” is to choose a franchise that grants us exclusive treatment for our area, ensuring that we will be the only ones who can open under its brand. Another solution is that if the franchise plans to open more establishments in our “area of influence”, we have preferential treatment and are offered customized expansion plans.
- Read the fine print
Although a good part of franchises usually demand a percentage of their monthly profits from their franchisees, some are so abusive that in their clauses they can demand up to 50% of all our profits. And others, even more devious, may require us to contribute to the company’s annual communication and marketing budget.