If you are willing to get associated with a business that is already established, you are probably looking to take a franchisee. Although the franchisor is already an established and proven business model but still there are exceptions that should be well understood before the association.
Taking a franchise, you are choosing a proven business model. You bring expertise and funds. The franchisor, in turn, brings expertise and reputation. Remember that you create a business: it will ensure you have a good strategy in the short and long-term study your business plan carefully.
Find the concept that matches your profile
By joining a franchise network, you set up your own business in an organized network in which you will be able to develop, sell and manage. It is therefore essential that you choose a concept that will motivate you, a concept for which you are ready to fight against the competition. If you are looking to expand in India or take a franchisee in India, it may be a tough task for you to choose the right franchisor because a lot of the same industry businesses are expanding and distributing their franchisees.
Be aware of the cost
Once you have identified your business, consider the costs of different franchises. Franchisors that you approach will give you a pre-contractual information document (PID). This document details the costs that you will support: entry fee, exit fee, security deposit, bank guarantee fees, and contributions to teaching, materials mandatory training and business operations contract and you have to add the cost of buying or renting a room and your earnings. Take the total and calculate how will you fund it? Personal contribution? Bank loan? How long can you reasonably expect to repay the loan?
Calculate the profitability
In front of your costs, put your income. Make a profit and loss forecast for 1-2 years and 3-5 years. Check the numbers with the franchise network. Look at their income statements. Are they profitable? Make simulations with different assumptions of sale. When do you start to be profitable? In the middle of contract? At the end of contract? Can you reach a higher salary than an employee?
Research & Review
It is a must execute step for making your decision final, you can ask other franchisees of that business for the future opportunities, you can do a lot of internet research for calculating the brand image. You can choose some business consulting services for better understanding of risks and complications of the investment.
Prospects for short and long terms
Finally, sign a contract for a reasonable period, usually 3 to 5 years. This period must be long enough to allow you to make a profit. Make sure your contract is renewable at least one time so that you also have the fruits of your labor with your customers.