The presence of the pandemic in 2020 changed the entire structure of society and had an impact on all aspects of life. One thing that is greatly affected is the work aspect. Many people have lost their jobs, even though they still need money to meet all their needs. As a result, many also choose to start a business as a solution. One model that many people are looking at as a business development option is franchising. In fact, this franchise business model is said to be an alternative to increase the number of business actors in Indonesia.
Well, one type of business that many people are now pursuing is the food franchise business. Quoting a review in Tempo, types of instant food, frozen food and long-lasting snacks were able to soar in the midst of the pandemic because of their practical presentation and long-lasting shelf life. A number of contemporary food variants can now be frozen and easily served independently at home, making it easier and attractive for customers to buy regardless of the applicable health protocols. This product can also be marketed more easily online, making it a promising opportunity for resellers in the current conditions.
Even so, is this food franchise business definitely profitable and guaranteed to be successful? In fact, no. If it were, surely everyone would do it, right? Developing a food business is not without many risks and challenges. In fact, Qasir's data notes that the decline in F&B (food and beverage) business transactions since the government's recommendation for social distancing reached 30%.
Starting a food franchise business with all the potential and opportunities that exist is certainly fine, but what things must be prepared to open this type of franchise?
Food Franchise Business Pros and Cons that You Need to Know
In a review Kompas, every effort is being made to be able to save franchise businesses in Indonesia. With dynamic conditions and demands, especially now, several aspects of business need to be adapted. Even so, local franchises which are not yet as big and strong as foreign franchises, do not need to be discouraged because even large franchises have experienced hits that are no less hard.
As explained in KoinWorks and Jurnal, there are several benefits that can be obtained from having a food franchise business. First, rather than starting from zero, food franchise businesses usually already have business management that is ready and mature and have a relatively fixed market. Second, franchise brands that are well known by the public usually already have their own market and a good reputation in the eyes of the market, so there is no need to make a big effort to attract market attention. Usually, franchise businesses also have collaborations with raw material suppliers, and under certain conditions even have their own financial management system to facilitate the process. Because of this, food franchise businesses actually have a faster chance of success.
On the other hand, some food franchises require high initial capital, depending on the size and popularity of the desired franchise. Not only for cooperation agreements, but also for various necessary equipment. Not to mention equipment such as raw materials, which often need to follow the collaboration and quality standards that already exist in the franchise. In this business model, space for movement will also be very limited because of the system that has been set up. Another risk to watch out for is market trends. It is not uncommon for entrepreneurs to buy franchises following trends, even though this has a big role in influencing business conditions. Apart from that, entrepreneurs must always be prepared to bear losses, especially if they are not carried out seriously and actively, because competition in the market will always exist, the business will also be affected by the reputation of other franchises, and it is not uncommon for there to be cuts in profits from the main franchise.
So, a food franchise business is not completely guaranteed to be successful, but when we understand the risks, of course we can make choices and manage strategies appropriately.
Practical Tips for Organizing a Strategy for Selecting and Managing a Franchise
What needs to be done when choosing and managing a food franchise? Here are a number of tips that can help you.
#1: Learn all about franchising
Before starting something, try to know the ins and outs completely, so that you are always ready to face the various things involved. Ask lots of questions to make sure you really understand the franchise model used, because it will influence the business strategy you use.
#2: Understand personal financial capabilities and risks
Because franchise businesses also have various preparations and risks, it is important to understand the conditions and capabilities from a financial perspective. Choose a franchise business that is suitable and affordable for your costs. It is not uncommon for things to happen that are out of control, for example economic problems or even pandemics. It may also be necessary to incur costs when there are changes to the system or brand appearance of the central franchise owner, differences in consumer demand across locations, as well as high costs of food stock and raw materials from franchise partners. It is necessary to be ready and committed to recovering costs before reaping profits.
You also need to be careful in spending, including deciding what point of sales you will use. If you want a point of sales that is sophisticated and can help with all your business management matters but is light on your pocket, it would be a good idea for you to choose a point of salesthat does not require subscription fees or subscription fees.
Qasir carries a freemium system, where entrepreneurs can use all the basic features for free or free in the initial phase of their business. When they have scaled their business to a higher level and need more comfort in transactions and managing their business, they can purchase premium features individually according to what they need.
Interested in trying out Qasir's basic features? Just download on your Android device here.
#3: Recognize trends and the franchise's track record of success
Remember, business doesn't happen overnight, you know! The choices you make at the start will have an impact on your long journey ahead. Therefore, it is important not only to follow current food trends at one time, for example boba or banana nuggets, but also to choose products that are continuously needed by the market. You also need to choose products with affordable prices, but still high quality, so that they can meet customer needs well. Don't forget, look for a franchise that is easy to run on a daily basis and has the potential to generate profits, based on its track record.
#4: Read the franchise agreement thoroughly
Every entrepreneur needs to understand the role, system and term of the franchise business agreement. Here it is very important to read carefully, even if it feels heavy. This will regulate the running of your business according to the corridor set by the center owner. Apart from that, you need to know the number of regions you own, the amount of sales inventory, estimates for the future, regional competition, and online sales management. Don't hesitate to consult with experts or experienced people so you know your rights and obligations.
#5: Know the basic and additional costs required
In addition to the cost of purchasing the business, franchising sometimes includes costs that are not previously visible. For example, royalty fees or a percentage of food product sales, marketing, or employee training. Make sure you know all the costs involved before actually buying a franchise.
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#6: Prepare the location and system to run the business
After making an agreement, do simple research and choose a strategic location to start a business. Run your franchise business using established operational systems, raw materials and equipment standards. Don't forget, always apply friendly and good service to attract and retain customers.
#7: Seek advice from fellow franchise entrepreneurs
While processing and running a business, there's no harm in seeking advice from experienced franchisees, especially with similar types of products. Why? It is possible that during the preparation process, there are several things that you have missed. With this, you can evaluate the running of your business and make continuous improvements so that your business can be more optimal from day to day.
In addition, entrepreneurs who focus on developing franchises need to pay attention to several of these aspects. Explained in an article Investor Daily, generally things that need to be well prepared are strategies for financial aspects, marketing aspects and human resources (HR) aspects.
In the financial aspect, entrepreneurs need to always pay attention to the balance they have in reserve funds for operations for the next three months. This is very important, especially in the midst of a pandemic. Apart from that, entrepreneurs need to routinely calculate the total operational costs and income projections for the franchise business they are running, along with current trends. Entrepreneurs also need to prioritize expenses and control raw material costs to avoid excessive and wasteful spending.
Regarding the marketing aspect, entrepreneurs need to try to produce attractive promotions or sales programs, so they can increase sales, even if little by little. It's challenging, but try to create a marketing strategy that is relevant to situations like this using media that is close to customers, such as social media, chat applications, and attractive banners. Don't forget to carry out regular evaluations to see its effectiveness for your business.
Finally, any business cannot be separated from the human resources aspect, so entrepreneurs need to prepare for the educational needs of employees, both for daily operations and anticipating pandemic conditions. Likewise in food franchises or other types. After all, they will be directly related to our business, right? They also need support to be able to carry out their duties optimally, both through motivation and technological means to facilitate work and communication. So that employees can also work purposefully, create Key Performance Indicators (KPI) as a detailed guide, along with protocols that apply today.
In general, food franchise businesses have their own risks and potential benefits, but the most important thing is our readiness for all the consequences. Are you one step closer to starting a food franchise business, BossQ?