The concept of franchising, or what is known as a commercial franchise, has become a puzzle many new investors seek to solve, especially in recent times. Franchising has emerged as one of the most popular and effective entrepreneurial solutions globally. 

Various brands aim to grant franchise rights to multiple investors as a key component in marketing their brand worldwide.

A prime example is McDonald’s, the most famous and prominent success story in franchising. The franchise model enabled the opening of the first McDonald’s branch outside San Francisco, which then grew into a massive empire spanning different countries around the world.

How do I get a franchise?

The question of how to get a franchise and how to choose the right franchise project is the first thing that comes to the minds of entrepreneurs when deciding to invest in a project. Starting a company or brand from scratch is challenging and requires a lot of time and effort. 

Therefore, franchising is one of the most important options available to entrepreneurs as it is considered the best alternative to establishing a company. The steps to obtaining a franchise can be summarized as follows:

1. Identify the Sector: Determine the industry in which you want to acquire a franchise.
2. Find a Company: Locate companies that offer franchises in your chosen industry. It is advisable to find more than one company to compare options.
3. Review Terms: Carefully read the terms and conditions of the franchise agreement, as these can vary from one company to another.
4. Submit Application: Apply for the franchise with the company, including the following documents:
   • Commercial registration
   • Tax card
   • Property ownership or lease contract
   • Military service status
   • Professional practice license
   • Social insurance status
   • Bankruptcy certificate
   • Protest certificate
   • Criminal record

Following these steps will guide you in acquiring a franchise and help you make an informed decision about your investment.

Steps to Obtaining a Franchise

After your documents are approved, the franchisor provides a comprehensive written guide called the “Disclosure Document” within 14 days before signing the contracts.

• Confidentiality Agreement: This agreement pertains to the sensitive information included in the Disclosure Document.
• Support Commitment: The franchisor commits to providing full support, including technical, marketing, and administrative expertise.

What is the Franchise System?

The franchise system first emerged commercially in the mid-19th century through the marketing efforts of the American company Singer. The company granted agents the rights to manufacture and distribute sewing machines under its brand name.

Although Singer initially failed to generate sufficient profits from this system, the idea began to evolve from that point onwards. The franchise system has since reshaped the concept of the global economy, with most international companies adopting the franchise model.

The franchise system is a commercial arrangement where brand owners with high market profits grant individuals or groups the right to use their brand name and benefit from its reputation to generate profit.

The franchise system is based on mutual benefits. The franchisee receives the necessary support and training for production, while the franchisor benefits from brand marketing and receives a financial payment along with an annual percentage of the profits.

What are the Types of Franchises?

Understanding the types of franchises is crucial when answering the question of how to get a franchise and how to plan for it. Franchising is a flexible business model applicable to all types of commercial activities. The main types of franchises include:

Job Franchises

This type requires a low investment and is suitable for small business ventures. A wide range of services fall under this category of franchises, including:

• Travel agencies
• Garden care services
• Drain cleaning
• House cleaning
• Real estate services
• Shipping services

Investment Franchises

This type of franchise involves large-scale operations requiring substantial capital investment and a professional team to manage it. Key examples of investment franchises include:

• Hotels
• Large restaurants
• Fitness centers

Business Format Franchises

In this type, the franchisor provides everything needed to establish and operate the business, including equipment, operating systems, and marketing tools. This category includes fast food chains and personal care services.

Advantages and Disadvantages of Working in Franchising

There are many brands through which you can enter the world of franchising. While there are numerous advantages to obtaining a commercial franchise, it also comes with certain drawbacks. Let’s explore the key advantages and disadvantages:

Advantages of Franchising

• Exclusive Market Advantage: Gain a competitive edge in the market by using a well-known brand name.
• Target Market Access: Save the effort of reaching the target customer base.
• Reduced Risk: Lower potential risks compared to starting a business from scratch.
• Administrative and Technical Support: Benefit from the administrative and technical support provided by the franchisor.
• Lower Costs: Franchising costs are generally lower than starting a new business.
• No Prior Experience Required: Franchising doesn’t necessarily require prior business experience.
• Additional Income for Franchisor: The franchisor receives additional income and free marketing for their brand.

Disadvantages of Franchising

• High Franchise Fees: Obtaining a franchise can be costly, especially if the brand has a high market value.
• Limited Contract Duration: The limited contract period allows the franchisor the option not to renew.
• Profit Sharing: Franchisees must continuously share their profits with the franchisor.
• Restricted Management Freedom: Franchisees have limited management freedom due to the contractual obligations.

What are the Costs of Obtai0ning a Franchise?

The costs of obtaining a franchise vary from one sector to another. The cost of acquiring a franchise in the investment sector will not be the same as a restaurant franchise. Therefore, when considering how to get a franchise, it’s essential to calculate the costs, which can be outlined as follows:

• Franchise Fees: These are the fees required to obtain a license for the brand name, starting at $50,000, and vary according to the industry.
• Ongoing Fees: These range from 4.6% to 12.5% of profits, depending on the brand and the nature of the industry.

Tips for Success in Franchising

How do you plan for the future of your franchise? Do you create a preemptive plan, or do you solely rely on the support of the franchisor? Success in franchising, like any other business venture, is not guaranteed. Therefore, after learning how to get a franchise, it is crucial to thoroughly study the project and ensure the presence of factors that increase the chances of success. Here are some tips for success in franchising:

• Choose a Reputable Brand: Select a brand with strong market value and established reputation.
• Follow Franchise Agreement: Follow the rules and regulations outlined in the franchise agreement.
• Ensure Sufficient Capital: Make sure you have the necessary capital to sustain the business during the initial years.
• Understand the Business: Have a clear understanding of the business operations and responsibilities.
• Communicate with Previous Franchisees: Speak with previous franchisees to identify potential challenges and mitigate losses.
• Review Checklists: Study the checklists provided by the franchisor.
• Analyze Competitors: Understand your competitors by identifying their weaknesses and business strategies.

Knowing how to get a franchise is one of the primary and reliable business solutions for investors. However, caution must be exercised at every step, ensuring all legal requirements for obtaining a franchise are met.