Franchise Ownership: What to Consider for Prospective Investors and Franchisees in Nashville
Starting a business can be a daunting undertaking. With all the details to consider, you might find yourself wondering if franchise ownership is the right path for you. If you’ve searched for franchise opportunities in Nashville, Tennessee, you’re likely already familiar with the advantages of franchising. But there are key elements to consider before diving into franchise ownership.
Franchising is a popular business arrangement because it’s an efficient way to scale a business without completely reinventing the wheel. By pooling resources, franchisors and franchisees have the advantage of capitalizing on a preexisting business model as part of their own venture. But, before you sign on the dotted line, there are a few more details to evaluate.
In this article, we’ll discuss some of the key things to consider when exploring franchise ownership in Nashville, Tennessee – from initial investments and ongoing fees, to the franchisor-franchisee relationship and everything in between.
Location, Location, Location
Your franchise’s geographic location is an essential factor to consider. Will you be investing in a franchise in downtown Nashville, or in an outlying area? Calculate the population, competition, and cost of asset acquisition or rental in the area to get a clear sense of whether it will be worth the investment.
Geography also plays a role in demographic considerations. This includes assessing the number of target customers, median income levels, and employment rates. Be sure to research local and national trends to determine future growth potential.
Upfront Costs & Ongoing Fees
Before beginning a new franchise venture, it’s essential to evaluate upfront costs and ongoing fees. Unlike the cost of starting an independent business, franchisees pay fees that cover the cost of the brand licensing rights, franchisor support, and resources. These fees may include an initial franchise fee, royalty fees, and/or additional marketing and promotional costs.
Organizations such as the International Franchise Association and the Small Business Administration (SBA) offer helpful resources on franchising, including toolkits, directories, workshops, and more. Additionally, speaking with existing franchisees in the same market can provide an inside perspective and helpful advice.
Different Franchise Models
Your franchise’s model will determine not only the expenses associated with start-up and ongoing fees, but also the style of business. A few common models include single-brand franchisees with a single owner and multiple units, multi-brand franchisees with multiple owners and multiple units, and area developmental franchisees.
Each model has advantages and disadvantages and should be evaluated based on the type of business you’re looking to start. For instance, a single-brand franchise typically requires higher upfront costs compared to the other types of franchises, but offers the potential for greater returns in the long-term.
The franchisor-franchisee relationship is one of the most important factors to consider when researching franchise opportunities in Nashville. As a franchisee, you’ll be expected to maintain the franchisor’s standards. Additionally, it’s important to ensure that a franchisor is actively involved in the success of their franchisees.
Look for a franchisor that provides ongoing support and training, technical assistance, and access to resources for operational issues, and financial assistance for start-up costs. Be sure to ask questions, such as what type of technology and operational support will be provided during and after the start-up process?
Franchise Laws & Regulations
Before starting a franchise, it’s important to understand the franchise laws and regulations in the city/state that you plan to operate in. Depending on the franchise model, there may be separate registration requirements or specific disclosures that must be made in order to open a business.
It’s also important to understand the local labor laws and regulations, which may vary by area. The Department of Labor is a great resource to use for information about minimum wage, overtime pay, privacy, work hours, and other relevant labor topics.
In the end
There are several things to consider when researching franchise opportunities in Nashville, Tennessee. From an initial investment and ongoing fees, to franchisor-franchisee relationships and local franchise laws – understanding each of these elements is essential for success.
By pooling resources, franchisors and franchisees have the advantage of capitalizing on a preexisting business model as part of their own venture. But, as with any business opportunity, proper research into all elements of franchise ownership is a must.