There are franchises operating in several different sectors, such as the service, retail and restaurant industries. In a franchise, the entrepreneur establishes a company as part of an existing, tried and tested business model, becoming part of the franchise.
Franchising is based on a contract between two companies, and the new franchise entrepreneur must found their company prior to starting the cooperation.
Ease of entrepreneurship as a benefit
The popularity of franchising has increased in the last few years. Currently, there are more than 5,000 franchise entrepreneurs operating in Finland in roughly 250 franchises. The good thing about a franchise is the ease of operations. The business model is tried and tested, and the entrepreneur will get access to a well-known brand and the support provided by the franchise against payment.
When contemplating franchising, you should carefully consider whether you as an entrepreneur are able to commit to the values and operating models of the franchise. Franchising is a good option for entrepreneurial people who value moderate risk-taking and the chain’s support.
The more moderate risks are explained by the fact that, in the franchise model, the business idea has been proven in the market and the model often gives access to the benefits of the franchise, such as purchase volumes and the popularity of the brand. Many franchises also provide orientation for the new entrepreneurs.
As part of a franchise, the entrepreneur agrees to adhere to the concept. As an entrepreneur, you are bound by the franchise’s ways of working and, for example, you may not have much say in the product range as opposed to starting a business fashioned after your own business idea.
The scope of the subjects that have been decided in advance varies from one franchise to the next, but often the product range, essential tools, corporate image, marketing methods as well as the operating models of customer service are dictated by the franchise. That said, no franchise has decided all aspects of the business, and any matters outside the framework of the concept are decided by the entrepreneur.
Starting the business requires initial capital, just like in any business
Starting a franchise business usually requires an initial investment and capital, just like in any business. Especially so if the company’s line of business affects the required initial investment. Joining a franchise usually means paying the franchise a joining fee at the beginning on top of all the other initial investments.
It is good to keep in mind that the rates of the different franchises vary hugely and that there are different-priced options out there. That’s why it is impossible to state unequivocally whether joining a franchise is more expensive than operating outside one.
Check the terms of cooperation carefully
Many of the franchises are looking for new entrepreneurs all the time. If you are interested in becoming a franchise entrepreneur, it is worth your while to investigate which of the franchises are currently looking for new entrepreneurs.
You should carefully check the operations of the franchise and compare the different alternatives. Once you have found an interesting franchise, carefully find out the terms of cooperation you must approve to join a well-known franchise.
Many franchises are only too happy to provide interested candidates with information. It may also be a good idea to contact some of the other entrepreneurs in the franchise to ask about their experiences in order to form a realistic view.
You should go through the contract terms in particular with a fine-tooth comb and, if necessary, hire a professional before making your final decision. Many franchise contracts are signed for a fixed period of time, such as five years at a time.