Franchise, is a good alternative for entrepreneurs who wanted to start their own business.
Consider starting a franchise business is literally
less risky than starting a business from scratch particularly in nowadays ever-changing
business conditions. Don’t get me wrong, any new business is risky, so does the
franchise. All you need is to get an established franchise business as well as
business plan, so that your success can be assured. I have shared here the 5 extremely
useful tips for an ambitious you:
TIPS
#1: Do Your Research
First, you should refer to Franchise
Disclosure Document (FDD) and find out every single detail about the franchise
company, its company background, leadership, litigation and bankruptcy history
(if any), as well as your initial investment, equipment and operational
requirements, and other obligations as a franchisee.
According to GE Consult’s franchise consultant Fred Wu,
potential franchisees should find out their exact role and scope of work as an owner, potential return in the investment, payback period, inventory
requirements, and chances on getting a loan approval for the franchise. Most
importantly, seek for suggestions and comments from other franchisees and make sure you get big “YES” before signing on the dotted
line. Remember, you are solely responsible for your own diligence.
TIPS #2: Strategic Location
Location is all that matter especially in
the retail and F&B industry. It is always the toughest decision every
franchisee will encounter when it comes to location, hence the market surveys,
property related reports and experience will be able to lead you to make better
decision. No doubt, as the decision maker, you will need to understand your
target market and consumer behaviors while ensuring less rivalry within a certain
radius (e.g. 5km) could be a good guideline for you to decide.
TIPS
#3: Focus on Customer Service
A franchise business gives you a proven role
model, modus operandi and a clear-cut marketing plan, but customer experience
and impression is your call. So let’s
train yourself to be a manager and team player while maintaining customer-centric
staff that would go for extra mile to leave an extraordinary impression to your
customers, such effort should be your priority.
TIPS
#4: Consult a Specialist
Franchise agreement, financial statement
as well as taxation issue is quite complex, to consult a lawyer specializing in
franchise law to review your franchise agreement contracts is highly
recommended. Also, you can consider hiring a franchise consultant who can
assist you to validate both fixed and variable costs, including equipment
purchase, inventory, operating costs, hiring costs and various tax
considerations.
TIPS
#5: Consider a Formal Business Structure
A formal business structure is critical to
separate your personal assets from the business. Most franchisees prefer a LLC
(Limited Liability Company, also known as PLT in Malaysia) or Pte Ltd (Private
Limited Company, also known as Sdn Bhd in Malaysia) for favorable tax and shares
arrangement. You should consider setting up a LLC rather than a sole
proprietorship as franchisors would prefer to collaborate with local registered
LLC, in general.
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About GE Consult
Founded
since 2003, GE Consult has helped numerous local SMEs/SMIs in
developing their company profiles, business plans, business proposals
etc. assisted clients in securing business deals and contracts. If you
are looking for a winning company profile or any professional services,
please do not hesitate to contact us at (+6017) 330 8077 and/or email rachel@geconsult.org for further service explanation.
