With Startup and Franchise opportunities on the rise, India is being slated as the upcoming destination for young entrepreneurs. Franchises are tried and tested business models that can ensure steady success, if done the right way. Here are a few points to remember, before making that brave decision.
Do you have enough capital? Would you get a bank loan? Would you be able to incur recurring expenses like rent, staff salary and other logistics? If yes, you've cleared the biggest roadblock between you and the dream of owning a franchise. A good franchise will cost you somewhere between Rs. 20-30 lakhs.
Type of business
Although fast food franchises are the most popular, you can choose something that you have expertise in. For example, if you're a consultant, you can look up Consultancy firms that have franchises for sale. That will ensure you have subject matter expertise and can handle queries and requests efficiently.
Sometimes, franchisors require you to pay them a part of profit as royalty (5-30%). Do ensure to include that in the mix when calculating future profits.
While owning a franchise is a safer bet than starting your own business, you must keep in mind that market conditions can often destabilize even the most steady business. Any kind of business comes with a level of risk and if you're willing to take risk, you have the game half won.
You would be expected to adhere to the terms and conditions that govern the franchise. Hence, there might be little or no scope to show your own creativity. If adhering to rules comes to you with difficulty, you might want to reconsider your idea of buying a franchise. Alternatively, you can ask the franchisor about the scope for your individual creativity and whether that fits in the overall business plan.
Location, Location, Location
You must ensure you're set up at the right place where your facility is visible and welcoming. Investing a little more on a good location can go a long way in ensuring a healthy, long franchise life.
You might want to check with the franchisor if they have plans of opening up another franchise in the vicinity of your facility. The last thing you want is competition from the same brand you're selling. Many franchisors will customize your contract to include your clauses into it. You can request them to disallow any franchise of the same brand to open within a certain radius of your business.
Ask for resumes of the franchise leadership during your correspondence with them. Leaders with years of industry experience will ensure they sail your franchise out of troubled waters during tough market conditions.
It usually takes 6-8 months for a franchise to break even. Ask your franchisor to chalk out your business growth plan, if they don't already. That way, you'll be better equipped to take financial decisions pertaining to further investments and working capital.
Alternatively, you can list down your strengths on a notepad and then begin the search for a franchise that requires those qualities. This will ensure you fit the bill and can excel in that particular business.
With a market value of around Rs. 84,000 crores, the franchise market is big in India at the moment. You must remember though, that starting any business means a lot of time and effort and opening a franchise would require your undivided attention for the first 2-3 years.