5 Best Ways to Run a Franchise | LegaMart Articles
How To Run a Franchise - Franchise in Commercial and Business Law

5 Best Ways to Run a Franchise

Buying a franchise can be a great way to start your business, but in order to run a profitable franchise, there are a few crucial steps that must be taken into account. 

John was planning on running a branch of Burger King with the same secret recipe, but a new trademark. After entering into a franchise agreement, he designed a new trademark and set new standards for his so-called new business.

These actions raised objections from Burger King because John had ignored his most important obligation which is following the Franchise System. “As a franchisee, You may technically be the boss of your shop, but you must follow the orders of the home office.”

Therefore, it’s necessary to learn about franchise nature and its prerequisite steps before binding yourself. 

What is a Franchise?

As defined by Wikipedia, the franchise agreement is a contract based on which the franchisor entitles the franchisee to operate a business, or offer, sell, distribute goods or services identified or associated with the franchisor’s trademark, so the franchisor’s business is basically duplicated. By entering into a franchise agreement, the franchisor will have the chance to expand its company without the risk of debt or the cost of equity.

For more detail about the franchise agreement you can resort to the link below:

6 Essential Elements of Franchise Agreement

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What are the Advantages of Buying a Franchise?

How would one find out the proper way to get into the business? Is it better to start up your own individual business or you should start as a franchise of someone else’s already established business? To answer these questions, first, you need to compare building a start-up with buying a franchise and then find which one suits you the best.

Building a start-upBuying a franchise
FinanceThe burden of financing is on your shoulders.You have the Backing and support of a parent company. 
Use of TrademarkYou should design your unique trademark.You have the right to use the franchisor’s trademarks.
Use of Know-howYou should use your own know-how.You are entitled to use the franchisor’s secret know-how.
CreativityYou can have your independent ideas regarding running your businessYou should work in compliance with the franchisor’s instructions and policy.
Startup vs. Franchise

Therefore, if you’re planning on building a new independent start-up based on your own ideas, buying a franchise is not the right choice. On the other hand, if all you want is to start a business regardless of its independence, and besides you don’t have enough financial resources to start a new business, buying a franchise has a higher success rate for you than traditional business start-ups.

Steps to Run a Franchise

However, running a franchise requires just as much hard work and effort that running an independent business does. There are a few must-known steps that should be taken in order to run a profitable franchise.

1. Choose the Right Franchise

The first step is to find a suitable franchise based on your interests, skills, and funds. “Buying the right franchise is similar to looking for the right job. Evaluate your skills, experience, and personality to find the right match”.  You can read this guide to learn how to choose the right franchise.

2. Check if Your Community Needs the Franchise

You need to observe the number of branches that your target franchisor owns in your desired location. If there are already two McDonald’s branches in your neighborhood and there’s no more demand for another one, then you should run your franchise in another location.

3. Create a Business Plan

Like any other business, you need to create a comprehensive business plan. This plan should contain an executive summary, a business description, a description of the company’s products and or services, an analysis of the market and industry, a marketing and sales plan, a management and organization section, and finally a financial discussion including a 3-5 year financial forecast.

4. Have Enough Money

It’s true that the necessary costs of running a franchise are much less than building a new business and besides you have the support of the franchisor. But still, you need enough money for startup costs. Depending on the market this money varies from several thousand dollars to $1 million.

5. Follow the Franchise System

Buying a franchise is basically following someone else’s proven business model. So in order to reach its successful outcomes, make sure to act in compliance with the franchisor’s system. This requires paying enough attention to operations manuals and training offered by the franchisor.

For example, the franchisor may be well-known for the special taste of its food, its employee certain way of clothing, and their nice behavior. All these standards must be followed by the franchisee as well. 

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