5 Things to Do Before Starting a Franchise Business

Did you know that the franchise market in the Philippines is one of the largest in the world? With our love for food and a growing middle class, franchises make up nearly 8% of our country’s gross domestic product as of 2022.

Many Filipinos who dream of becoming an entrepreneur are attracted to franchising because it’s a great way to explore the business world without starting from scratch.  Franchise businesses come with an established reputation in the market, a pre-existing customer base, a strong supplier network, marketing and training support, and a proven operating model. But just like any other business, franchising has its own downsides, such as potentially high upfront investment, fees, and limited control. 

So before starting a franchise business, be sure to do these five things.

Do thorough research 

Believe it or not, some people think franchising is easy and get into the business without doing enough research. But to avoid unnecessary mistakes, it’s crucial to take your time to learn everything you can about franchising. That includes identifying available franchising opportunities, understanding the industry you’re interested in, checking a brand’s reputation and legitimacy, studying the competition, and doing the math for the costs of franchising. 

One of the best ways to gather information is by attending franchising seminars or expos where you can hear success stories, meet franchisors and franchisees, and learn good business practices and industry trends. It also pays to reach out to franchisees and ask them about their experience. 

Choose a franchise wisely 

Just because a franchise is popular doesn’t mean it’ll work well for you. It’s still important to do further research and consider factors like your goals, the demand, initial investment, your budget, and the market you wish to serve when choosing a franchise. It’s also good to visit some of the stores to observe how a franchise operates and the customers they are serving. You can also reach out to franchisors to learn more about the business, their requirements and restrictions, and the kind of support they give to franchisees. 

Once you have enough information, you can narrow down your list and pick your top franchise.

Investigate the location

Choosing the right location for your franchise is incredibly important, as many businesses fail due to a bad location.

When deciding on your franchise’s location, look at the rent and lease terms, other tenants, foot traffic, types of people or potential customers that frequent the area, nearby competitors, and accessibility. You can also talk to the franchisor to check if your preferred location meets their requirements and ask for some tips on which location types work well for their brand based on their experience.

Write your business plan

While some franchisors don’t require a business plan, crafting one can help you secure a franchise agreement more easily, get approved for a loan, and keep track of your goals. A good business plan must include your business strategy, market analysis, and financial projections as well as timelines, desired results, and concrete steps to achieve your objectives.

It’s important that your business plan is realistic and shows that you understand your target community or market.

Study the franchise license agreement

Once you’ve decided to get a franchise license, it’s time to begin the application process. Typically, you’ll need to present an accomplished application form, a letter of intent, details and map of your proposed location, resume or curriculum vitae, and government-issued IDs. However, some franchisors may ask for additional requirements.

After some meetings and assessments with the franchisor, you will be asked to sign a franchise agreement. But before signing on the dotted line, be sure to review the terms carefully and ask questions if anything’s unclear. If you need to, you may also get a lawyer to help you review the paperwork.

Get training and support

Franchisors usually have specific guidelines on the store’s space, appliances, and amenities to ensure they’re aligned with the company’s branding. So be prepared to get trained on the franchise’s  branding, products, payment technology and processes, and sales tactics to help you get your new business up and running. 

Buying a franchise is often seen as an easy way to become an entrepreneur since several aspects of the business have already been set up by the franchisor. However, starting a franchise still comes with risks and challenges. To thrive as a franchise business owner, don’t rush the process and do your best to make informed decisions every step of the way. 

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