Looking for Regional Information?

Insight to Franchise Buying

By Johnny Ezilon.com Articles Published 09/23/2008 | Business and Finance

The benefits that the franchiser should provide to a franchisee are guidance, advertising, and support to cater the needs of the franchisee. Some times to make extra profit the franchisers do not fulfill these stipulations and try to get away without helping the franchisee.

 Financially plan everything

The most important thing to be kept in mind before starting a franchise is to set the budget. By doing this you will be able to make out how much you can spend on your franchise. One need to be careful as starting a franchise is not similar to a small business started from a scratch. It involves perils and is expensive. Before investing your money always analyze is it worth spending so much capital.

Decide sensibly

The second vital thing to be kept in mind before buying a franchise is to choose the right franchise from the incalculable franchise options in the market. Go for those franchise options that are high in demand.  As compared to small business success rate of starting a franchise is much more.  A franchise which may be considered most likable may not be so once it has flooded the market with its goods. So you need to analyse every aspect of it carefully.

Be aware of the business

Finally when you make up your mind to buy a franchise, the franchisee must thoroughly understand the guidelines regarding the franchise prospect that he or she is in fact buying. Everything mentioned in the contract should be understood well by the franchisee before signing it. One should not go by verbal discussions that may be just to fool the franchisee or may give a false picture of the franchise. Entrepreneurs must all the time go on with care at every step of buying a franchise.

 Some problems faced by franchisee

As franchises are expensive to buy it becomes a major problem for the Franchisee. Franchisers have to be paid their royalties at regular intervals. He also has to pay debt service from the moment he buys the franchise.

No freedom
To buy a franchise means to stick to the rules made by the franchisor as it is his idea of doing the business. Franchisee has to abide by the rules set by the franchiser. It is his responsibility hold on to the concerns good picture and superiority of goods and services.

Buying a franchise has less risk factor as compared to starting a small business as it has its market people know about it beforehand, this build the confidence level of the franchisee.