5 Tips to Find the Right Franchise
Nowadays, more and more businesses are opening, making the industry competitive and exciting. The Department of Trade and Industry reported that there were around 957,000 business enterprises in the Philippines in 2020. Now, during the country’s recovery phase, these numbers are foreseen to grow.
With all these brands and concepts in the food, retail, and service industries, one can be easily overwhelmed by the massive diversification. The current trend is to franchise an existing brand instead of starting an entirely new business from scratch. This is because franchising a reputable brand could result in a 90% success rate for the aspiring franchisee, according to a USAID study conducted a few years back.
How to find the right franchise brand? If you are scouring the market for the right brand to franchise, here are five easy and useful tips that could help you decide and move forward on your venture.
5 Tips for Aspiring Franchisees
1) Unique brand and concept that you Love
Is this a product/service I love and would want to pay for?
As with most things in business and life, finding the right franchise starts with something that you love. A business that you would be proud to call your own, a brand that you believe in, and a product and service that you are excited by.
Having this confidence in your business will result in a healthy, motivating, and fulfilling business environment not just for you, but for your partners, staff, and customers.
2) Financially profitable and stable
What’s the average profit per month?
Franchising is about duplicating a successful business, so make sure that you find a franchise that has the right profitability for the investment that you put in. Understand the payback period – the length of time that it will take to recover your investment or ROI. This will allow you to discern whether your investment will be worth it or not.
You also have to understand the monthly profitability so you can decide whether to give up a job for this franchise or if the cash flow is right for your lifestyle. This will help you plan your expenses and envision your financial growth.
As a reminder, if the financials are too good to be true, it probably is. Always conduct your due diligence or use your common sense should the financials presented to you by the sales rep look high or over promising.
3) Rigorously developed franchise program
Who developed the franchise program and does the brand have an operations manual?
Not all franchise programs are created equal. Some entrepreneurs wake up one day and decide to franchise their business out and do so by downloading agreements and manuals online and just deciding on fees and royalties based on just looking at the rest of the brands.
Others, however, take the time to work with franchise experts and consultants to rigorously develop every aspect of the program from the business planning, to operations manuals and legal agreements, down to marketing and sales strategies. So when finding the right franchise for you, make sure you understand how the brand prepared the franchise program as it is the backbone of the entire franchise system.
HOT TIP: Look for franchise brands that are members of industry-recognized organizations like the Philippine Franchise Association. Or you may also consider brands that are made by certified franchise consultants like Francorp Philippines.
4) Aggressive marketing and innovation
What marketing activities do they do? How often do they introduce new products?
Franchisors typically charge franchisees a monthly marketing fee. Understanding where these fees go and how the franchisor uses it to build the brand is important so you understand how the brand owners are taking care of, and growing the brand. As the brand grows, so does your franchise.
Equally important is how often they innovate on their products, foods, or services. Imagine owning a food franchise that only serves one or two items and never introduces something new. It would be very difficult to keep on attracting customers over the long term.
5) Non-stop support
What ongoing support do they provide?
Franchising has a 90% success rate because of the continuous support that franchisors give franchisees. In fact, this on-going support is what sets franchising apart from all other types of owning a business. You are in a business for yourself, but not by yourself. So better understand the type of support you will get and who will support you from the Head Office. How many store visits or audits do you get? Will they help you in local store marketing? In the continuous training for your staff? Most established franchises have their own Area Managers or Field Officers that are tasked to support and help each franchisee along the way.
This is crucial as you continue to learn the business and leverage on the experience of the franchisor so you don’t have to make the same mistakes as them. This kind of unwavering support can boost your confidence and know-how as well as your franchised business’s performance and profits.
With over 1,600 franchise brands to choose from, aspiring franchisees have never been more spoiled with choices. These five tips will definitely help guide you as you narrow down and choose the right franchise for you.
Are you looking for the right franchise for you? Sign up for free on How to Invest in the Right Franchise seminar featuring various brands and get a free franchise matching consultation.
Sam Christopher Lim is the CEO of Francorp Philippines; Co-author of 12 Strategies for Franchising; President of U-Franchise Sales & Management; Chairman for ASEAN Integration of the Philippine Franchise Association; and Chairman for ActionCOACH Philippines.