Types of Franchises to Consider Investing In

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When it comes to investing in franchises, researching ahead of time before making any decisions is the best way to ensure a decent return on investment. Not every franchise has the same financial commitment because none of them are created equal. The market has several types that investors or aspiring entrepreneurs can choose from, but the key is to find the business arrangement and industry that suits your needs and future goals. Even though this route is flexible and easier than opening a business from scratch, investors must understand every type to prevent any mistakes or financial losses in the future. Read on to learn more about the types of franchises that may interest you. 

Retail and Fast-Food

 

The most common choice for investors is always related to retail and fast-food franchises. It will need a large investment and this choice is part of the high-investment category because the business requires a physical building. The large investment means that you must choose a profitable franchise that can increase your return on investment chances. Find a great spot for the restaurant or store, ensure that it has the right specifications for your business type, and ensure that it’s in a lively neighborhood that will generate sales for you. Consider reading the agreement and contract thoroughly before signing, especially the part about running multiple outlets. Making sure that there is a development agreement that will be signed in the future and can guarantee excellent profits for you as an investor. The number of outlets and the timeframe for opening them will be agreed upon and signed beforehand, minimizing any misunderstanding around the amount of money needed for the investment.

Not sure if a fast-food franchise is for you? If you have a passion for the product or products you will be selling and want to hit the ground running with a guaranteed customer base can give you the best start. Many restaurants or fast food franchises are ‘turnkey’ meaning everything is done for you and you have to think about nothing except turning up and opening the doors. This accounts for somewhat hefty fees that come with this type of franchise. Choose from franchise opportunities that are suited to your skills and experience to give yourself the best chance of success in this fast-paced environment. Be it donuts or pizza, burgers or chicken!

 

Home-Based

The recent coronavirus pandemic has led to an increase in home-based franchises and working from home has become quite popular. The current status of the world with the Covid-19 outbreak is the perfect time to explore different home-based options. The UK has suffered a lot because of this novel virus, but many investors are ready to make home-based business investments as a permanent business arrangement. The choices for work from home franchises vary and the key is to compare different companies and industries until you find the right one that suits your requirements. Education is a profitable choice because most schools and learning centers are focusing on conducting online classes. Consultancy is another excellent choice if you’re willing to be trained to help other companies operate properly. Mobile businesses are trending because of how profitable they can get, whether you choose an e-commerce store or delivery services. Home-based franchises are an appealing arrangement to invest in because it provides high levels of convenience to the investor.    

Large Investment Franchises

Large investment franchises are not for everyone and they require a substantial amount of money. The most common example of a large investment franchise is a hotel that investors can buy, but the process isn’t easy and follows a strict set of specific steps to maximize success. Brainstorming the type of hotel that suits your experience level is the first step, to ensure that you’re investing your money in a business you’re familiar with. Review your budget and financial records to guarantee that you’re financially ready to make this decision. Conducting thorough research is the next step, checking different opportunities that match your skills, interests, experience, and budget. Since this route requires a large sum of money, consider applying for a business franchise loan from a reputable provider. Consulting with a marketing specialist is a smart move to confirm that the hotel in question is profitable and that the local area has excellent potential for growth in the future. This choice will be too large to handle alone, but delegating certain tasks will make the process easier over time.

Jobs 

Labour work franchises are relatively easy and require low-investment arrangements. Even though some of the jobs can be managed at home, you can still choose to operate normally with minimal staffing. A fee and startup costs will be needed for materials, vehicles, equipment, and possibly rent if you don’t work from home. The common jobs are cleaning services, plumbing, event planning, travel agencies, lawn care, pool maintenance, and smartphone repairs. The profits from this business model are appealing because of the minimal financial commitment needed and the chances for growth are promising enough for a lot of investors. 

Conversion

The model of conversion franchises is considered the hybrid choice, converting independent businesses into several franchise units within the same industry. It is an excellent chance for companies to experience appealing and rapid growth because the franchisee uses the company’s marketing plans, trademarks, training systems, advertising plans, and customer service standards. This choice is quite popular in several industries, including HVAC, plumbing, real-estate, florists, professional services, and electricians. Operations will be easy because companies will not be starting up from scratch and the clients/customers are already there. The changes made after the agreement is to increase popularity, brand recognition levels, growth, and profits over time.

Products and Distribution 

The product-driven franchises are a great choice to invest in, distributing products from the main company. A Franchisee will use the same brand name and trademarks, but they will not use the same marketing plans or operations model to run the business. The choices for investments are better off with large product dealers/manufacturers to ensure high ROI levels. The examples for this franchise can be computers or laptops, vending machines, cars or spare parts, tractors or drills, appliances, and bicycles. Consider getting a better deal by having the parent company license you for manufacturing and not just distributing for increased profits.

Whether you choose a low-investment or a high-investment franchise, you must familiarize yourself with the common aspects of all forms of franchising. The first one is compliance when it comes to systems and operations changes. Franchisees may make some changes without the franchisor’s consent. However, it’s very minimal,  and a franchisee should have a good reason for the changes because they know how the system works. The second aspect is the consistency of keeping the quality of work the same across all franchises, ensuring that a franchisor’s huge investment isn’t put to waste. Extensive research and time will help every investor choose the right business arrangement that they can rely on. 

 

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Adam Tanton

Adam Tanton

Adam is a partner in B2BNN with over 15 years experience in the enterprise technology field.