Investment tips – a beginners guide to franchise investment.

Everyone is searching for the hen, which lays a golden egg. A quick way to get rich. Many wrongly perceive that investing in a franchise business is just that, a magic wand to make you rich with a single wave.

Here are some investment tips to keep in mind for a franchise business model.

Choose the franchise model that will suit you. If you’re strapped for time OR have another primary source of income FOCO model is the way to go. In FOCO (franchise owned Company operated) model, the franchise has to invest and pay the said amount of fees, while the company looks after the day to day operations. The concept here is, the investor has to put in the money and the company will take care of the rest. Now, if you’re looking for a higher return and much more flexibility to run your own franchise. Without much involvement from the company then the FIFO model will best suit you. In FIFO (franchise owned franchise operated) you have to invest as well as take care of the day to day operations.

Understand the risk.Investment tips

Before going with the popular opinion and fishing in troubled waters, asses the risk associated with each model and different companies. A popular misconception is that, if you invest in a known brand name no risk will be coming your way. Its true, the risk will be at its minimal but unforeseen situations can completely change that. Demography, income per capita, location and local culture will have an impact on your success


Consult an Expert. You might get overwhelmed while exploring different options. So, speak with an expert on which brand is currently hot and are stable, which company provides better support to the franchise, etc. An expert will inform you of the nitty-gritty and inner working of a company. This will help you make an informed decision.

Consider the total costs. There will be an upfront cost which includes the franchise fees for the rights to use use the brand name. Ongoing costs are operation cost that you have to cough up for getting the establishment up and running. On top of the initial franchise fees, there will also be regular payments of royalty. Compare and take into account all of these costs before going with a company.investment tips

Diversify your Investments. Never put all your eggs in one basket. Don’t just invest in one company, diversify your portfolio by investing in different companies. You might never know when things can go south. So, as a safety net don’t do multiple investments in the same company.

Speak with other franchise and owners. Meet other franchise and see if they are happy with the investment. ask them if they’re expectations have been met by the company. This will help you get a feel about the company and their relation with the franchise.

Great customer service. In the end, it all sums up, if the customer buys your product. Build a good relationship with your customer, gain their trust. Select a well-trained staff which will always be sympathetic towards a customer problem, and be complying towards their request.investment

Be smart, play safe!

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