Goodwill begets goodwill and profits begets profits. This seems a universal statement on the face of it and is one reasons for most folks investing in starting a franchise business. That said, there are certain grey areas which one does encounter, be it the franchisor or franchisee which becomes apparent only after the enterprise starts.
Today we tell you the facts of franchise opportunities from both perspectives.
Can owning a franchise make the franchisor rich?
A well-fed cow which is taken care of in every way gives its owners the best returns. Similar is the case of a franchise. It should first have a mass appeal to be hived off into a separate entity which can stand on its two feet and negotiate with its clients and create an appeal for itself. If the brand is not well-formed, expecting returns from franchising it could be a folly. In fact, with franchise being quite an established business model, it is pertinent on its owners to first let the brand be formed with a solid identity before others can be expected to reap benefits from it.
But where the brand is well-formed, and the franchise-holder takes good care of retaining its identity besides promoting its products and services in the right circles, franchising it can bring in good returns- provided the franchisee too is just as well endowed to do justice to the brand. Sometimes the latter isn’t the best fit for a franchise brand due to factors including lack of experience, lack of knowledge, lack of adequate resources to take up the challenge of promoting an established brand in which case the franchising arrangement could result in failure and no income for the franchisor.
Can buying franchising rights make a franchisee rich?
Owning the most lucrative franchise brands can make the franchisee rich, provided the latter knows how to handle operations, keep costs under control and generally add to the brand’s value. It does happen at times that people do buy franchise rights of some of the most awesome products known but still can make themselves right.
Most of the time it can be attributed to either lack of experience or lack of adequate study into factors that may upset the applecart. For instance, taking the franchise of beverage production (like a Coke or Pepsi) in areas where water supply is either very limited or is very brackish.
Either way the business may have a tough time as the very basic ingredient is hard to get. The other reason why a franchisee does not make money is due to the brand itself not having the kind of appeal that is expected to rake in the moolah or it comes with hidden or unexpected charges and expectations (like having to shell out heavily on real-estate or infrastructure).
Either way, a franchisor or franchisee can make money ONLY when:
- The franchise brand, its products and/ or services are known, admired and in demand
- The franchise seller is clear with what they expect and for what reason which should be backed by solid reasoning and not idle whims.
- The franchise buyer too is clear with what the latter expects, and for what reason. This should be backed by solid experience, knowledge and adequate resources which may be called upon if the need so arises.