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Information being a Franchisee or Franchisor in Malaysia
From McDonald’s to 7-Eleven, Old Town Kopitiam to Papa Rich, there are more than sufficient opportunities in the franchise sector for you.
If you aim to be a franchisee, then you must consider several options. At most times, it is not only about how much money you have to invest. In fact, you might have a million ringgit to start an Old Town White Coffee business but is that the most viable option?
Not all franchises are created equal
This can be quite obvious when it comes to franchises and you can judge them based on their franchise fees. However, this does not mean that paying a high franchise fees means you are bound for success and the same goes for franchise opportunities that are cheaper.
What should you be considering then?
Choosing the right franchise is very much the same as starting a business. It comes from the idea. What you should really consider before jumping into any franchise business is your attitude. As a franchisee, you are most likely some form of an entrepreneur. As such, you need to have some basic skills. You have to be mindful of money and how to manage them because at the end of the day, it is all about profit and loss.
Capital and funding
Since you are going to start your business, you must first know how much you have. Questions you might ask include:
- How much initial franchise fees can you afford? – this will help you to determine which tier of the franchise programme you can get involved in
- how much capital do you have in maintaining the business. You need to have some form of cash flow to last you for the next few months (or years)
- Do you have additional sources of funding that you can seek if you need to in the future?
What is more important than money here is yourself. What is that that you are seeking to achieve at the end of this. What role do you want to play in this business model? Do you want to be involved in the operations of the business or are you looking for something that you can be a silent owner (or partner) and allow others to run the business? This is most common if you are buying a food or retail franchise where you can very much let it be on auto-pilot by hiring people to operate the stores.
Do your homework
Not all franchises are as lucrative as the others. Some brands have been around for years while some have past records that might not be too positive. Chatime in Malaysia has had its up and downs and that is just some of the case stories that you might heard of. Before deciding on the franchise you like to invest in, do some research and find out if they have any past or current litigation or any other pressing issues.
Payment and revenue model
This is one factor you must consider and one which you must ultimately be comfortable with. Some franchisors require an annual payback of profit sharing (usually a small percentage). Some require monthly settlements of profit of the business. Whatever the payment system is, you must understand that the franchisor usually enjoys the most profit. Hence, you need to be aware of such a model and how it works (or does not work) for you.
Having said all that, it is very important that your franchise business get all the support you need from the principal. After all, you become part of their network of branches which means they need to give you the marketing, promotions and any other forms of support that you need in order to let your business take flight.