Keys to choosing a franchise when investing

Do you want to start a franchise business and do not know what the keys are to choose a franchise? Don’t worry because, if you want to invest in franchises, in this article you will find all the keys to choose the type of franchise that fits your needs.

What is a franchise?

A franchise is the concession of the exploitation rights of an activity or commercial name to another person who is not the promoter. This concession is resolved with the payment of an amount of money provided by the license to start the activity.

It is a marketing system based on collaboration between the legal and financial independent company. That is to say, the franchiser and his franchisees. In this way, the franchiser grants rights to the franchisee so that he can exploit the economic activity of the company for his own benefit.

In order to choose a franchise you must know that the most remarkable advantage of starting a business under a franchise regime is that your business activity starts with a name and a social position within the market. This acts as a guarantee in the immediate future, since it reduces the risk of closure during the first months.

Franchised entrepreneurs have an 80% business success rate during the first years. Franchises are usually the safe bet for those who want to invest in a business that is already in operation.

On the negative side, you have to take into account that no matter how much dedication you offer to the business, it will never be owned.

Do you want to invest in franchises?

If you want to invest in franchises, you should know that there are multiple types of franchises, but most of them are classified by the type of activity they are dedicated to. Let’s see which ones are the most common:

  • Activity criterion:

We can undertake a franchise of various sectors. For example, we can choose a franchise from the industrial sector, from the commercial sector, dedicated to the distribution of a product, service franchises or mixed franchises.

Of this type of activity, the franchises that have more rotation and demand are those of retail and restoration.

  • Location criterion:

This group is divided into two types. The first type comprises corner franchises. This type of activity is carried out in a specific space. The second type of franchise by location is the shop in shop. This is a type of corner that recreates the decoration and the atmosphere of the chain to which it belongs.

  • Franchiser-franchisee relationship criterion:

This criterion determines the participation of the franchiser. This treatment can be shareholder or main. In the first case, it will be specified if the franchiser can be a shareholder of the company and, in the second case, he assumes the role of the entrepreneur.

The operating result of a franchised business is positive, as it generates profits and employment.

  • Choosing a franchise: which one suits us best?

Once we have reached this point, we already know what type of franchise we are going to open and how we will manage it. But we still have another analysis to make, our own. What type of franchise is best for us? How can we choose a franchise that is right for us?

In the following points we will explain to you how the franchiser is suitable:

  • Used to following rules. Most franchisers establish management rules and you have to follow them. This also includes the management with the suppliers and the type of product sold in the store.
  • Labour efficiency. Security and speed in the decision-making process.
  • Business vision.
  • Having enough money to invest.
  • The type of successful franchise is one that adapts to the needs of the consumer and offers at all times what is demanded.

Our franchise: the keys to success

The keys to the success of a franchise are also measured by the business experience of its promoter. Experience tells us that the preparation and previous study of all the steps to be followed augurs well for a good start. The success of choosing a franchise depends 20% on the knowledge of the sector and 80% on the business skills of the franchisee.

We must prepare market studies and feasibility plans to make a business x-ray of what it will mean to open a franchise.

We must also have enough knowledge about the sector in which we will operate.

As if it were a criterion, the location of the business also plays a very important role in its success. Choosing good premises, well located and well communicated, will help the optimum operation of the franchise.

Choosing a franchise: the brand is important

Choosing the right brand will also help the smooth running of the franchise. You have to take into account what type of company you are franchising and what your target audience is. This is the moment to discard companies with products or services of temporary fashion.