Independent business or franchise? You decide
You have been working in the industry for over a decade or more and dream of setting up your own business. But, setting up a business can be difficult. If you have an entrepreneurial streak in you, then buying a franchise can be great because of the range of products or services that can come under it—from quick service restaurants (QSR) to education, from recruitment to beauty, from retail to healthcare. According to Franchise Asia, industry is growing at the rate of 30-35% every year and its sales turnover was pegged at over $7 billion.
When you buy a franchise, you are buying an established model of business that has already proved to be successful. They are the perfect solution for those who wish to invest in the security of an established brand and business, while enjoying the freedom offered by the franchise model, not to mention a ready customer base, network support and access to proprietary technology. According to IFA Educational Foundation, over 90% of franchisees renew their agreements at the end of their contracts.
Franchise business buyers typically have lower investment costs, especially upfront, than standalone businesses. While a QSR costs Rs 7-15 lakh to set up, a recruitment franchise can be set up with as little as Rs 2 lakh to Rs 12 lakh.
A lot of people often mistakenly feel that franchisors charge high royalties. Since business models vary, there is no standard royalty amount. They can start at 3-4% and go up to or more depending on many variations and are preset. A royalty is the cost of doing the franchise business and usually the benefits far outweigh the costs. Always do your due diligence when looking at any franchise opportunity and talk to franchisees.
Remember, the franchisor will only provide the business model. For a QSR, the food needs to be easy to make, tasty to eat, quick to serve and ready to take away. Likewise, for a recruitment franchise, you need to create your own niche, identify vacancies across industries, create a client pool and network with corporates and other recruiters.