Now that you have made up your mind to buy a franchise unit, but are you sure that things are going to work out, no matter what you are offered? As a rule of thumb, you will go with the most trusted brand and may find the price tag quite high. So, how would you rate the franchises and what yardsticks would you need to zero in on any franchise offer?
Although there are no standards or metrics to rate franchise offers but there are certain parameters that can be used to determine the value of a particular franchise offer. These parameters are briefly described below and help in defining best franchise deal.
Brand Name and Identity
With globalization, the markets have been flooded with different local level, state level, national level and internationally acclaimed brands and services. The most lucrative and in fact expensive in terms of franchise fee and licensing fee are the international franchise brands. These brands have immense popularity and cross continental acceptance. But that is not it. Some international manufacturers and service providers may give you license, but not the kind of support you require. Therefore, it is important that the investor knows beforehand as what kind of support he would be provided in order to get the best franchise deal.
Franchise Fee and Royalty
Many people believe franchise fee to be an abstract or just based on an estimate as to the value of the brand. Again the fee is higher for renowned international brands. However, many franchisors have in place a system to evaluate the genuine franchise fee and royalty. These are calculated on the basis of services provided, marketing and brand management cost, expenditures incurred on research and development, etc. Suppose a new brand of hotels offer franchise. It is unjustified to pay any amount the franchisor wishes and without any consideration for the services the franchisor may be providing. Best franchise deal has a carefully devised franchise kit.
As experts say, it is not necessary that every business model will be successful with franchising. Even if the franchisor has a wonderful deal, but it depends on many other factors like geographic location, socio-economic conditions of the target customers, etc. These factors make up what is called as franchise feasibility. To make it with an example, it would be a great blunder to open a fast food restaurant with non-vegetarian food, at a place where most of the population is vegetarian. Therefore feasibility has to be considered beforehand.
These are some of the points that can be used to determine as whether the claimed best franchise deal is really worth it or not.