How to decide on taking up a Franchise Business in India
You may decide to take up a franchise business as and when any of these reasons get accomplished:
1. Successful prototype
If the company has an existing business which is very successful, then you may consider taking up the franchise of that company. For this you will be required to check the turnover of the company from its existing business, the kind of expenses they incur and the profitability on investment. Once you have studied this, you will get a clear picture of the company’s performance.
2. Customer Pull
The product or service that the company offers has an excellent customer pull. This means that the company has created a brand value for its product and services such that its products are sold by its name. For instance, World of Titan which sells Titan watches is the biggest brand name in its category.
3. Franchisor’s Approach
Lots of time, you may not come across the first two reasons as it might be an entrepreneur without a deep pocket who intends to sell a franchise. In such cases, you can judge how passionate and dedicated the entrepreneur (franchisor) is towards the business.
4. Return On Investment (ROI)
This is one of the crucial things you need to check in ANY business and this requirement has to be satisfied for anyone to take up the franchise. There might be some average companies with excellent ROI options. There might be two reasons for this: Either the company is new, hence offering such a proposal or is planning to cheat you. It is always beneficial to consider opinions of existing franchisees in such cases and understand their experience with the particular brand.
5. Systems and Operations (S&P)
Does the Company offer you a strong back end support in terms of S&P? A strong S&P driven Company is always a bonus. To develop a sustainable S&P in a business model is a great task. Hence, expecting smaller companies to have a strong S&P would be gauche but there should at least be an intent or effort towards implementing the same. In larger companies if you don’t find this then it would be misjudgment on your part to consider that particular company.
6. Status Symbol
For human beings there is always a latent desire to hold a high position in the society. Taking up a franchise can satisfy this latent desire too. You may choose to own a brand which has got a splendid reputation in the market. In this case, possibilities are that your Return on Investment might be low but it satisfies your latent need of holding a high position in the society.
There are some Franchise Companies which have been in market for more than 25-30 years and have developed certain expertise in conducting business. Working with these Companies may not give you an excellent Return on Investment but the amount of knowledge you might gain in terms of conducting business will be so high that you may execute this knowledge in your other businesses and compensate for the Return on Investment lost in this case.
8. Concept Appeal
Does the idea appeal to you as a customer? This is possibly the first question which you need to ask yourself. The reason we are putting this in the end is because psychologically everyone does ask this question to oneself before even discussing about a franchise model. If you are one of those who doesn’t mind doing any business until it generates good profitability then you can skip this question.