The 5 Main Pillars of a Franchise

As an entrepreneur looking to gain entry into the franchise world you probably have a lot of options. Choices in industries have never been ampler as it is right now. So, if you have some choices longlisted already, then it’s time to measure them up to the five pillars which form the foundation of a franchise business. So after you have looked at the list of top 10 franchises in USA, it’s now time to check the parameters to assess them by.

Cost

Investment in franchise comes in three steps. First is the franchise fee that a franchisee pay to buy the franchise right of a company. For Fortune 500 companies, it is 5-figure at least. Once that is bought and paid, the next big investment is the cost of set up. Be prepared for the biggest investment in this entire deal. Read a franchise magazine to know more about the setup investment and the limit you should never exceed. Then there is royalty fees which is lesser than the above, but is fairly substantial.

Size and Scope of Growth

Always asses the scope of growth of a company before investing in it. In that, check its number of open units and those that are actively operation and making profits. Follow its growth rate and pattern and the instances in which shops have closed down.

Support

Find out about its support from training to marketing to operation to franchise infrastructure. The greater the support system is, the easier it gets for franchisees to operate.

Financial Stability

Acquire copies of your franchisor’s financial statements that are recently audited. You will know all about its financial graph and performance.

Brand Strength

Before buying a franchise, find out about its brand strength. For some its social media, while for others its system size or years in business.