Franchising and Social Media Marketing: Tips for Franchisees

Is it worth starting a business with franchising at all? Prospective business founders are rightly concerned with this question before they start their own business. After all, founders who become self-employed with a franchising system have to give part of their sales to the franchisor every month. In addition, franchisees are often restricted in their decisions and must adhere to the criteria specified by the franchising headquarters. However, not every founder can cope with these regulations in the same way.

Therefore, before entering into a franchising system, the basic requirements voices. Extensive preparation and dealing with the subject of franchising is essential here.

to gather information

If you want to start your own business, you first have to acquire important know-how. Because if you know in advance where stumbling blocks and obstacles are lurking, you can avoid them and save money costly missteps. The same applies to franchising. Business founders should therefore plan enough time to obtain comprehensive information on the subject. The following questions must be clarified in advance:

  • How does franchising even work?
  • What qualifications should I have to get started in a franchising system?
  • How much equity is required? And what other points need to be considered when it comes to financing?
  • What rights and obligations do I have in franchising?
  • What role does the franchisor play?

Although the advantage of franchising is that founders start with an existing and proven business model, franchising also means getting involved in someone else’s business idea and identifying with it as if it were your own. Franchisees must also be aware that they often work closely with the franchisor. However, not all founders can cope with these conditions. And not every founder is automatically suitable as a franchisee. Therefore, it is important to find out about the Peculiarities and possible stumbling blocks in franchising before founding a company.

(reading tip: How dependent are franchisees on franchisors?)

Clarify financing in advance

As with their own business idea, founders must first invest in franchising before the idea can be turned into reality. Once founders have found the right franchising system for a start-up, a so-called entry fee due. This allows the founder to become self-employed with the business concept of the franchisor. In addition, the services of the cooperation such as training or finished marketing concepts are compensated.

In addition, franchisees must monthly franchise fee pay to the franchisor. This fee is typically between 1% and 10% of net sales and depends on the franchising system, industry and services.

It is therefore important for start-ups to clarify in advance how much equity have these available for the foundation. If a loan is taken out from a bank for self-employment, at least one third of the total investment amount should be available in equity for this to be granted.

The type of franchising concept also depends on the amount of equity capital. Some franchising systems offer models such as cooperation within the framework of a joint venture. In some cases, temporary employment as managing director until the takeover of your own franchising system is possible if you cannot raise enough equity. However, these opportunities are rather rare. Here this should be only drawback only be the missing capital.

There is also a risk when entering a franchising system

It is often assumed that founding a company with franchising is less risky than founding a company with your own business idea. After all, franchisees receive comprehensive support from franchisors during the foundation.

But even franchising is not without risk. Because in any case, founders should be aware that as a franchisee you are also an independent entrepreneur and bear the full risk of failing to set up a business.

Examine franchising systems closely

It can take a long time to find the right franchising system. After all, a detailed search takes a lot of time. In addition to combing through brochures and other information about the system headquarters, you should also research the company on the Internet. In any case, it is important that founders Discussion with selected franchise partners search before signing the franchise agreement. The advantage here is that a franchise partner can report on their founding experiences with the selected system and point out special features to founders.

Check pre-contractual information

Every franchisee has the right to obtain complete and truthful information about the franchiser before signing the contract circumstances of the system or the associated conditions to obtain information. The franchisor is also obliged to inform the franchisee about possible circumstances before the conclusion of the contract, which only the franchisor is aware of and which could influence the potential franchisee’s decision about the conclusion of the contract. If this obligation is violated, claims for damages are conceivable if the franchisee suffered damage as a result of the incorrect or incomplete information.

Overcoming challenges in franchising with business start-up advice and legal advice

So that it doesn’t get that far in the first place, all the information provided by the franchisor should be checked very carefully before a contract is signed.

Business founders should read through all the information carefully and prepare questions that will be asked of the franchisor.

To be on the safe side, it pays to consult experts who will check the documents before founding and then carry out the legal review of the franchise agreement.

It is therefore advisable to seek contact with a management consultant and a lawyer at the beginning. In this way, founders save expensive costs for later mistakes. Depending on the subject of advice and the federal state, founders can have the financial expenditure for business start-up advice subsidized by state subsidies