Before you choose to become a franchisee

If only the franchise bid, many assume it is the easiest way to start a business, sure profit, existing brand, we will get training from established franchisor, and others. But what we hear those who have not as probable headlong into the franchise business. The purpose of my writing this post just to share my own experience TWO open franchise units and the experience my friends.

Before you choose to become a franchisee of a franchise business system, I think you needs examine the following. Failure to comply with one of the following rules, will result in failure, but I thought you may be bankrupt!

FIRST:

Questionnaire system supplying their products. We must remember our goal is to leverage the franchisee purchasing power or "economic of scale". Which means, a great franchise system and franchisee already has a public course can supply goods at a lower price from other suppliers outside.

Create a little research, compare the prices they offer for 10 types of products, compare with similar products from outside suppliers. If their prices higher, just forget the franchise. If they fail to provide at competitive prices, meaning you do not have a profit margin in the competitive market. You must remember, you will compete with many other dealers who obtain supplies from outside suppliers. Are you able to compete later?
Following reasons, the franchisor is willing to "markup" price higher than other suppliers in the market, saw only concerned about their profit alone. You want to take shelter under the franchisor of such?


SECOND:

Study franchise fees imposed, it is worthwhile with their brand name? There are parties who charge franchise fees as low as RM 5000, some as high as Rs 120.000. Many within the RM 30,000. You must remember this is the cost of your business. If the franchise fee is RM 30,000 for 5 years, meaning no increasing the cost of Rs 6000.00 per annum. Then also survey, is the franchise fee can be returned if you make the decision to cancel the franchise agreement? Reality, most of the franchisor is only interested in making profits through franchise fees, I repeat most franchisor is only interested in making profits through franchise fees. Be careful. In my opinion there is no brand that Malaysia should put the franchise fees it on their business, because there is no large-scale advertising such as McD, KFC and the absence of a strong name in the market than their competitors.

THIRD

Cyclic system is still stock and supply. Try to find out there, whether you INSTRUCTION take whatever stock is supplied without the franchisor itself from the freedom to choose your own stocks and products that you want to put you in the store (this is the retail franchise system, beauty, and that depending on the product) . Do you need to pay up as soon as the goods into your store?
Are there any options for you to return all goods to the franchisor if you fail to sell these?

NOT on any questions above, you better forget beseech the franchise. Reality, most of the franchisor in Malaysia is only interested in selling their products on the franchisee, and "secure" their profits, without taking the risk of whether products may be sold or not by the franchisee. A lot happens, franchisee become "dumping ground", meaning the "dumping" goods in outlets that are not behavior-franchisor to the franchisee outlets.Terrible? This is the reality franchise system in Malaysia. If you do not fall franchisor give you credit, because you will owe to any, and most of them charge 1-1.5% interest each month.


FOURTH

Are you interested in a franchise system that requires you to "bank in" daily sales or deposited in your account franchisor ostensibly they can manage better. Meaning they will push the cost of stock, the cost of rental shops, your cost of business loans and others. Believe me, such a system would be wrong in your own long-term. Try you ask them, say if sales in a month is very low, only able to meet the cost of goods only, whether the franchisor will continue to pay rent and loan business? Whether you can earn from your own business?

Reality, not hope. Rental, lending it your problem. Important for the franchisor to ensure that only goods that you take, be paid in full. That's it.

CONCLUSION

There are many criteria you should consider. I will touch on the following series in the future. I just hope you think -ripen before entering the franchise business. Maybe you need to see the existing franchisee, or find those who know the business for advice.