What to Know Before Buying a Franchise?

Thinking of starting up a business? And don’t want to start building a business from scratch?

Franchise might seem the easiest and most convenient way to escape the risks of business, well this is not true.

Even though franchise might be an established and well-known company it is not as easy to run and handle as it sounds.

Franchises are established brands so you don’t need to spend time trying to establish and create a brand name but it doesn’t come for free you need to pay a price for it.

Just because you own a successful franchise of a company doesn’t mean that you will achieve success overnight

Usually, franchises are worth a lot and you seriously need to analyse and understand factors from various different points of views.

Here are some tips/points to take in consideration to help you make well informed and thought upon decisions before buying and investing huge amount in a franchise:

Advantages and Disadvantages

Everything has its own set of advantages as well as disadvantages.

The advantages of owning a franchise includes getting a business that has already been setup and not spending time and effort in production or marketing and an established system to manage the work.

You get a well-established business which is widely known and holds a brand name

At the same time, we cannot ignore the disadvantages of a franchise, you will only be able to sell the products and you won’t be able to take business decisions and will have to as told. This further can hinder your growth as a businessperson.

Are You Willing to Work Under Someone?

You need to understand that owning a franchise means that you can’t be a participant of the decision-making process.

That you can’t take decisions related to business or have any say in the way a business is running, you will have to abide by all the rules setup by the owners of the business.

As the owner of the franchise, you might be subjected to various rules, such as what product to sell, how to sell, the setup of the location, price of the product and various other things.

If you are okay with this then you can opt for buying a franchise.

If you see yourself as a person who wants to be able to make their own decisions or someone who is creative, who always comes up with creative ideas then this might not be the right option to opt for.

Which is Your Preferred product to Sell

you don’t really have a say in what a company produces and sells, but you can choose a product and list out the companies which offer the product and you can choose the best company from all available options.

Try choosing a product which you have knowledge about and are interested in selling. This can make it easier for you to sell the product.

When the customer sees your enthusiasm towards selling a product, they become more compelled to buy it.

Also ensure that whatever business you opt for you have complete knowledge about how it works and the customer base this eliminates your chances of business risks.

Fix an Amount

Decide how much you are willing to invest in a business.

Franchises requires huge amounts try finding franchises which fit in your budget and this can make the process simpler to you

This is one of the most important factors to be considered, because if you want to buy a franchise which involves huge costs and you have insufficient funds to buy it then it is simply going to be a waste of time for you.

Cost of Establishing Franchise

You have to understand that paying the fee to an organisation isn’t going to be the only expense that will occur to you, you will have various other expenses you will need to take care of.

You are going to need to buy a place or a land to build up the franchise or you might need to rent a place, set up the place to ensure proper interiors are there.

You need maintenance costs along with electricity charges and salary to pay to the employees for rendering their services, you might also need a security system and a billing system to work with.

You need to estimate the cost of all such factors and see if you are willing to invest so much in the business franchise

Earnings Through Franchise

You need to estimate how much you are going to earn from the franchise you need to estimate your profit margins and what is the maximum as well as minimum you can make from the franchise.

The best way to estimate could be by reaching out to franchise owners and ask them about the profitability of the firm and how they are doing

Legally the franchise owners can only provide you with the information regarding their financial performance under article 19 of FDD

They can only provide you with the financial performance of their business and the information provided should be documented and verifiable

Problem solving approach

Try understanding how does the firm handle disputes and problems when it arrives

You can do so by reading the clauses and the agreement thoroughly before signing it. Make sure you know about all the details mentioned in the legal document because later you will be bound by it


Owning a franchise has its own set of advantages and repercussions. There are various factors you need to consider before taking such a big step.

The points mentioned above can be of some help solving few of your doubts related to owning a franchise and at the same time might have created many others too.

Make sure you keep a note and track of all the points you come across and understand it completely, Try reviewing and analysing all these factors before making up your mind to actually buy a franchise

Franchise is a big deal so make sure think it through.

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