As a buyer, it is essential that one chooses a business that provides best of
the options; of course franchisee has to balance between their investment
capacities and the qualities of a prospective business, however there are
some key determinants that vouches for the quality of a franchise business
whatever be the size. It is hence an important task to analyse if the franchise
possess such qualities.
When you have shortlisted the types of franchises you’d like to invest in, you
have to conduct an in-depth analysis of the individual business adopting
numerous methods such as online, visiting a franchise, visiting main business
centre in case of small and master franchise in case of a bigger business.
Key determinants of track record are the comparison between the age and
growth of the business over the years. The performance of the business
especially in the past few years and rate at which it has grown. A complete
track record analysis relating to finances, legal battles if any and other
franchise performance will help in gauging how established the business is.
The product or service or both of the business has to be flexible to the
changes in external environment and at the same time adaptable to newer
technologies. The Franchisor especially should be upgrading to the latest
technologies and introducing new products and services at regular intervals
and it is essential characteristic of any business. Franchise business, being
very competitive in nature this becomes an important quality.
Brand image is the centre of franchise business model. The brand image has
to be strong, well known and positive at large. The same could be determined
by looking at the demand for the product compared to its competitors,
reviews by people and other business and the franchisee themselves,
ranking of the business in specific industry and so on.
The current day franchise business spreads beyond boundaries of the nation
and the continent; a well developed business will study the local markets and
customise its products to meet the needs of the local market. This is essential
as a franchise could be successful only if it meets the local needs especially if
the product cannot create market for itself. For example a McDonald
franchise changes its ingredients at least a bit to suffice the palette need of
local community in Sri Lanka or Indian Institute of Hardware Technologies
(IIHT) is flexible with courses that are best suited for the market in Malaysia.
Franchise comes at a cost, a cost that is charged by the franchisor for the sale of the
trademark, authority and in many cases intellectual property. There are fees such as
royalty fees that is ongoing in nature and is common to any franchise business,
however, frequency varies from business to business and usually some franchises
charge fixed fees and some a percentage on profits. Other charges also come into
picture as development fund for marketing in the region or process upgradation.
Even though such charges are normal, it is essential to understand if there is a
balance between franchisor’s and franchisee’s growth. It is important to know if the
franchisor has a record of coming up with frequent and unreasonable charges.
Many franchise businesses such as Subway, IIHT
Franchise, Jan Pro, Euro kids and many such
franchises are known for their transparency and
introduce lot of materials on understanding
how franchises work that could act as a
#15,Sri Lakshmi Complex, 4th Floor, St. Marks Road, Bangalore - 560 001. India
Tel: 91 80 6160 4545 e-mail: email@example.com web: www.iihttechnologies.com/