If you have you ever considered investing your savings into a money-making venture, then congrats. You are a business-minded individual and have unknowingly or knowingly taken the first step towards putting your money to good use. While investing in shares, foreign exchange and other markets is a possibility, if you want to start a business and devote time and attention to the project to make it bloom, consider investing in a franchise in Pakistan.
Pros and Cons of Investing in a Franchise in Pakistan
Wondering if franchising is the right model for you? Here are a few advantages and disadvantages of franchising for you to consider.
Pros
1. Tried and Tested Systems
Investing in a franchise essentially means investing in a preexisting system that is already bringing in revenues. This means that the biggest advantage of being a franchise owner is not having to spend long and tedious hours in developing your own business model. A ready-to-use system is generally handed down to investors for use in their particular franchise once formalities related to the investment have been taken care of.
2. Provision of Equipment and Technology
Since the brand is already earning a return from its current methodology, you will simply be required to replicate it to earn big. For this, you will be provided all the hardware and software technology and equipment that you need. It will be consistent across the board in all the franchises of the same brand.
3. Training of Staff
As a franchise owner in Pakistan, you will be provided with the required equipment as well as the business processes you’ll need to cater to your customers’ demands. However, consistent quality cannot be maintained unless your staff is trained to handle the equipment in the right manner. As such, most franchising opportunities also include a training session for new employees to make sure that the business processes and product quality remains the same in all branches (franchises) of the enterprise.
4. Established Goodwill and Customer Loyalty
Consumers are generally brand conscious, and many will show loyalty to specific brands by visiting them frequently. As such, when you open up a franchise of a well-known brand, half of your work is already done for you by the goodwill and existing customer base that the brand has built over time.
5. Troubleshooting Network and Support
As an entrepreneur, if you get stuck somewhere and are looking for advice from industry experts, it might be hard to come by. However, with franchising, you are automatically given access to the franchisor, who can answer all your questions. If you think your questions are too basic to be put forward in a meeting with the brand owner, you might consider reaching out to the network of franchisees of the same brand, all of whom will have gone through similar problems in their early years and will be able to help you out.
Cons
1. Franchising Fee
Franchising is not cheap. A large chunk of money is needed to buy the name of a brand to add to your new venture. Although this cost is a one-time investment, it is still a considerable amount to be invested, especially when you could probably open up your own business at a lesser cost.
2. Royalty Fee
The initial franchising fee is not the only cost that you need to pay. The franchisor receives a certain percentage of your annual sales. Some brands might have a 5% margin for profit, while others may have a 12% margin. You will need to carefully consider the percentage before signing a contract for your franchise.
3. Lack of Creativity
Most entrepreneurs want to open their own business because it gives them the freedom to create something without restrictions. Unfortunately, the penalty you pay for getting a well-organised setup, a renowned brand name, and an existing customer base is the inability to be creative with your business model or processes. You must conform to the methodology that the business follows, whether you like it or not.
4. Dependence on Success of Franchisor
The success of your franchise is dependent entirely on the goodwill of the brand. If a scandal or scam surfaces, the general demand for products from your franchisor’s brand will decrease, and this will, in turn, lower your returns as well. This is also why it is imperative to determine the profitability, rapport, and reputation of a brand before investing in a franchise in Pakistan.
5. Selling Your Franchise
Business owners occasionally decide to sell off their successful venture with the hopes of reinvesting that money elsewhere. While this is certainly possible for independent owners, franchisees cannot simply sell the franchise off to anybody who wants to take over the business. The franchisor will generally have a say in who is the right buyer for the franchise, making the selling process complicated with multiple variables needing to be considered.
How to Make the Most of a Franchising Opportunity in Pakistan
Pakistan offers a range of franchising opportunities, but there are a lot of factors to consider before you jump in and become a franchise owner. Let’s give you an overview of what you need to keep in mind while investing in a franchise in Pakistan.
Do Your Research
Franchising opportunities in Pakistan generally cost a good chunk of money, and if you want to make a profitable investment, you need to do your part by ensuring that the opportunity is deserving of your investment. Research here does not just mean finding out more about the franchise and what the prospect has in store for you in terms of returns. It also means considering and reconsidering whether this an industry you really want to enter. Determine the skill set that you possess and your interests, and then aim to find the investment opportunities that suit your experience and skills the best.
Knowing which industry you want to enter with your new franchise is important, as franchising is done in pretty much every industry you can think of. From restaurants to clothing stores, automotive dealers, cosmetic brands and everything else in between, the options are literally endless. The choice depends entirely on your interest and expertise in a particular field.
Once you choose the industry, you can focus on finding all the available franchising opportunities of a particular type within Pakistan. Here, your research should be based on the reliability and reputation of the franchise, how well it’s doing internationally, what and how much would you need to invest in the setup, and what returns you can expect from it? You should also question existing franchisees to determine how their experience has been so far while working with the franchise.
Consider Your Location
Location becomes the next and most important consideration, especially if your franchising opportunity requires you to open up a brick-and-mortar outlet. When your profits are relying on the influx of walk-in customers, you need to facilitate them accordingly. The location of your shop needs to not only be conveniently accessible to the targeted demographic but should also offer sufficient parking space nearby for the convenience of customers.
For instance, if you are opening up a franchise for children’s wear, you might consider finding a shop next to an ice-cream parlour or a toy shop, as both children and their parents will visit such shops frequently. Similarly, if you wish to target high-end buyers of luxury prêt, you might consider opening up a store in one of the posh shopping malls located in any of the metropolises in the country.
Focus on Customer Service
When you consider becoming a franchise owner in Pakistan, the most important concern should be the quality of customer service. While franchisors can provide you everything from raw materials to the equipment and processes that you can use to duplicate the product, they, unfortunately, cannot ensure that the hired personnel will deliver that same standard of quality that the brand is known for. Make sure you schedule training sessions for your staff so that they can get the proper training needed to offer excellent customer experience and increase the goodwill that comes with owning a franchise of a known brand.
This is part of your responsibility as the franchise owner to ensure that quality and customer service does not drop below par and you continue to reap the benefits of your investment.
Keep At It
Opening and setting up a new business is a challenge, and often, rewards are slow and few, with lots of effort being put in to sustain and build a customer base. While owning a franchise for an existing brand saves you from a number of hurdles that you might encounter if you open up a new business, the experience can still be gruelling. When the going gets tough, remember that perseverance pays off. Keep at it. Take small but sure steps towards your goal, and you will be rewarded for it in the long run with the success of your franchise.
Have you weighed the pros and cons of franchising? Are you confident that investing in a franchise in Pakistan is right for you? If you honestly think so, then use our tips to determine which industry is the right one for you and read up on some of the franchising opportunities available in Pakistan. If not, you can also consider a range of ideas to start a business with a small investment. Good Luck!
