A franchise is a type of business in which the owner accepts a license or a franchise fee in order to allow other individuals use business resources such as product, branding and operational knowledge.
The business that grants a license to other individuals is called a franchisor while the Individuals or businesses that pays for the license are called franchisee.
In this type of business model, the franchisee is meant to pay royalties to the franchisor from time to time and this depends on the agreement between both parties.
The franchisee is also meant to get the operation principles of the business so that he can get an optimum result like that of the business owner.
The first time I heard about franchise business was when one of my uncles was succeeding in business and everyone admired him in the family.
So one day, I got that he owns a Mr. Biggs outlet. Back then Mr. Biggs was the best food outlet out there.
That got me think how he got to own a Mr. Biggs outlet. I thought maybe he own everything but I later found out that he paid for license to get a franchise from Mr. Biggs. That was the first time I heard about franchising business.
I think it’s a good model of business because you get to start a known business without starting from the scratch. That means leveraging on successful business model to build your own business
Advantages of franchise business model
Let us look at some Benefits of franchise business
When paying for a franchise, you will have access to the strategy that helps the franchisor succeed.
Unlike when you are starting a business from the scratch whereby you will need to figure out what works or not, in the case, a working strategy will be handed over to you and all you need to is work with.
When you pay franchise fee for a known business, you will be allowed to use their branding details such as logo, color, uniform, promotional items and other related items.
What this does for your business is that that it gives you a leverage because the brand might have had a large customer base already.
Which means you will be working with an existing customer base rather than building new customers.
Higher chance of success
In this type of business relationship, the franchisee has a high chance to succeed because there is an existing support system on ground.
It is more like starting a business and having a mentor to help you with the startup.
People that start a business having a mentor by their side usually succeed faster in business than people who do not have mentors. This happens because the mentors will show you the paths not to take so as to avoid mistakes.
Be your own boss
The franchise business model helps the franchisee to become his/her own boss.
Imagine buying a popular franchise outlet, you will automatically become the owner of that branch and everyone working in that branch will be work for you.
Even though the franchisee purchases the license from the franchisor. There is a limit of influence the franchisor can have on the franchisee. For instance, he cannot dictate the staff the franchisee will employ. So, there’s the franchisee automatically becomes his own boss.
Franchises also make profit than most business that startup individually.
This happens because they have a lot of factors working for them. People will prefer to make purchase from a known brand rather than make purchase from a new company.
The franchisor mostly run adverts and these adverts will have an effect on another available outlet. The franchisor is willing to spend on advert since he knows he will be making profit all the same.
In a franchise business, the franchisee can always reach to the franchisor for assistance in areas where they have issues they cannot handle.
For instance, the franchisee can receive training on how to handle and maintain important machines need for business operations.
Of which if the franchisor isn’t involved, the franchisee would have to go source for assistance from other places which might take more time or even be more costly and less effective.
Disadvantages of franchise business model
Here are some disadvantages of a franchise business model
One of the major challenges you can face when starting a franchise business is paying the initial license and setup fee
These fees are usually on the high side because you are working with someone else’s idea.
Starting your own business cannot cost that much, and that’s one of the benefits of starting your own business over buying a franchise because you can work at your own pace.
One other challenge the franchisee can face is the regulations that comes with buying the business. For instance, all outlets will need to work with same opening and closing time, which might not be too convenient all the franchisee.
This also depends on the agreement that was reached between the franchisor and the franchisee because sometimes this agreement can be flexible but it all depends on the agreement that was reached.
The reason for having such regulation is to maintain uniformity between all the available outlet else everyone will do what they like and it might affect the brand of the business. So, it is important that high standards are kept.
No financial privacy
The agreement in this model of business allows the franchisor to oversee the financial ecosystem of all the outlet. This is to enable the franchisor give financial guidance to the franchisees.
Some people will not be comfortable with this type of arrangement as they like keeping their financial life private.
For you to continue running your franchise business, you will need to pay your royalty fee, pay some fees for advert and training.
For instance, you will need to keep training your staff members so that they can meet up with the required standard set by the franchisor.
The thing is that businesses change, evolve and grow from time to time and others need to get trained so as to follow the train.
And the franchisees might need to pay some fees advert because the franchisor will run a general advert, which will cover for all the outlets. So, the fair thing to do is make payments to add to the advert fee of the franchisor.
Some franchise business opportunities in Nigeria
There are a lot of franchise business opportunities in Nigeria. You can take advantage of these opportunities and use them to start or grow your business. These opportunities are listed in this post.
Oil and gas sector
One of the industries where there’s opportunity to buy franchise business is the oil and gas industry. This is a good deal because most cars run on either on diesel or petrol.
So, if you can get a franchise of a petrol filling station that will be a good deal because some people prefer to buy from trust brands only.
This is due to some reasons such as avoiding purchase of adulterated fuel and to avoid being cheated as some filling station have set their machines to sell at higher pricing.
Some popular and trusted brand you can partner with in the oil and gas industry includes
Education is also a good Business in Nigeria because everyone wants to be educated but it doesn’t even stop there. Most people want to get an extra qualification or learn some skills.
Here are some good educational companies that you can buy franchise from.
Restaurant business is also a business that people cannot do without because everybody needs to eat.
People go to restaurant every day to eat because they have to eat. You cannot say you want to cook all the food you eat especially when your work place is in a different area to where you are residing. You will just need to eat outside.
When it comes to eating out, some people only eat from restaurants they can trust because of hygiene and these people don’t mind paying extra to get a clean and delicious meal.
Some people don’t like eating from brands that are not trusted because they do not trust their hygiene and they don’t want to talk sick, so they would rather go eat at a restaurant that’s trusted.
I’ve a list of some trusted restaurants that offer franchise in Nigeria. You can contact them for follow up if you are interested in partnering with them
Logistics and transportation are also a good business to dabble into in Nigeria because people send goods to different part of the country on a daily basis.
People also travel from one part of the country to another for different reasons and purposes.
I’ve written out some trusted logistics and transportation companies that offer franchise deal below.
Another industry that makes profit in Nigeria is the technology industry, but we will be focusing more on the area of those company that deal with selling of phones.
People keep buying phone every day, there’s no day you will go to slot or 3c hub that you won’t see crowd there and they all come to buy phone or come to check the price of phones.
There are still opportunities available in this line of business because these phone store areas not in every area and people will appreciate if they could get an outlet close to them where they can buy their phones.
There are lots of opportunities in the architecture industry because it is linked to the real estate industry.
People are building houses and people will keep build houses because everyone needs a shelter.
Here is a list of some companies that offer franchise in the architecture industry.