Franchising has become one of the most important business models in the modern economy. At the same time, franchise-based small business development has been rapidly expanding in several emerging economies such as China, Russia, and India, leading to greater competition among franchisors and franchisees alike.
To what extent do Chinese, Russian, and Indian entrepreneurs understand franchising? How do they perceive franchising opportunities? How would they respond to them?
A Definition of Franchising
You’ve likely heard of franchising in relation to restaurants or other consumer-facing businesses, but you might not know what it really means. Here’s a definition of franchising:
A system in which companies that are owned and run independently offer products or services using an established format, business model, and brand name created by and/or licensed from another company.
For example, McDonald’s—perhaps one of the most famous franchises on Earth—allows independent business owners to operate restaurants using their branding.
Understanding Franchise Opportunities
Franchising offers entrepreneurs an opportunity to build their own business by purchasing an established one.
But there are many aspects to consider before making such a commitment—from location and type of product or service, to name recognition and operational costs.
You should also understand what it takes for your business to succeed, or in other words, what does franchising have that you don't? Keep these points in mind when you're considering going into business as a franchisee
Common Franchise Types
Do you want to own your own business? In recent years, we’ve seen an uptick in entrepreneurship and small businesses.
According to CNN Money, about 565,000 companies were started every month in 2010; that number is up 8% from 2009. Many people who dream of owning their own business take a look at franchising.
Franchising can be incredibly lucrative—and incredibly challenging.
Do You Need A Franchise?
If you want to learn more about becoming your own boss, don’t hesitate to reach out and contact your local franchise broker for assistance.
Things To Know Before Investing In A Franchise Opportunity
Before you sign on with any franchise system, make sure to consider these things first. And don’t forget about your budget – it can make or break your efforts.
You should have at least six months worth of living expenses in case you lose your job, but it’s even better if you can save up 12 to 18 months of income as a buffer before making any investment decisions.
Also think long and hard about whether or not buying into a franchise opportunity is right for you and your family; while owning your own business will definitely present some challenges, they could also be worth it in terms of personal growth and success down the road. It all depends on what really matters to you in life.
Is Franchising Right For Me?
Many people ask themselves, Is franchising right for me? There are many reasons that franchises become popular in today's business world.
A franchise gives you access to established products and methods of operating, while letting you take advantage of someone else's concept and reputation.
While starting a company can be exciting, it also has its risks. Choosing to start your own business with help from an existing concept can give you more stability as you build your brand—and less chance of risk factors outside your control driving your success or failure.
Tips on Choosing The Right Franchise For You
Be honest about why you want to get into franchising. If you’re looking for a fun, flexible job that will let you spend time with your family, starting up your own business might be better choice.
While many franchises come with support and help from corporate HQ, they also require strict adherence to guidelines and process—and lots of long hours. Doing it all on your own could allow you to set your own schedule.
Steps In Starting A New Business
Before you can open up your doors to customers, there are a number of steps you must take. Here’s what has to happen before you can operate legally:
Open and register your business with your state and local government (called establishing a legal entity).
You may need to pay several fees, including an annual registration fee.
This process is called establishing legal standing or obtaining licensing/registration, depending on which state you live in.
If you want to form an LLC or corporation as part of your business plan, contact an accountant or attorney.