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Acquiring a Franchise in Mexico

If one intends to become independent and be their boss – and they’re at the crossroads of not knowing whether to acquire a franchise or start their own business – then franchising is for those who need support. Both options have pros and cons. The risk of failure is reduced by acquiring a franchise, but a franchisee has to meet basic brand guidelines.

According to INEGI Economic Demography research, 70% of new businesses will have failed after 5 years, 78% will have failed after 10 years, and after 20 years, only 11% of those businesses survive. And several factors influence business success, the main being the business plan.

Even when one has enough capital to start their own company, creating a business plan must be considered because the same study says that the main cause of the closure of new companies is business incapacity. The main difference between a franchise and one’s own business is that a franchise is an already proven business model; it already worked and operates under an already established scheme. On the other hand, a business started from scratch operates under a trial and error scheme.

Benefits:

Reduction of Investment Risk: A franchisee does not start from scratch; they begin working from an already established business and recognized brand.
Continuous Innovation: The franchisor has a specialized marketing team for product innovation, creation, and presentation; the franchisee only has to follow the established guidelines.
Assistance: To preserve the brand’s reputation, franchisors provide service to their franchisees in the face of any problem that may arise.
Training: By acquiring a franchise, one receives knowledge through training from the franchisor.
The parent company performs promotion and Advertising.

Starting a Business from Scratch

Disadvantages:

High risk of losing investment.
Lack of existing resources and a strong business plan.

Before making a decision, the entrepreneur has to analyze his economic situation and short, mid, and long-term goals & objectives. Also, the brand provides support and guarantees to its franchisees.

The figures indicate that 90% of the world’s franchise-model companies survive and succeed. On the other hand, less than 30% of conventional new businesses survive, and only 10% are successful.

There are national and international franchises worldwide, providing investment opportunities backed by experience and documented systems & processes.

To better understand the concept, a franchise is an agreement where the parent company (the franchisor) grants a license to another merchant (the franchisee) to operate a business that utilizes and replicates the franchisor’s business model, brand, products, and services independently in a given territory with consistent commercial and administrative methods.

Especially with the history of the past two years, one option is to acquire a franchise in health services such as medical laboratories, hospitals, clinics, and diagnostic centers. Listed below are different points that will help make a bold decision regarding franchising investment.

What are the advantages for the franchisee?

Reduction of risks and uncertainties by investing in an already proven business
Continuous innovation in methodology and technology
Training documented in Operating Manuals.
Access to administrative control systems and performance evaluation.
Training in production processes of goods and services
Working with a consolidated network of franchisees
Access to the promotion and advertising programs
Increase in personal prestige through involvement with an already successful business model

What are the critical success factors in a franchise business?

Determination
Financial capacity
Brand strength and recognition
Excellent product or service
Commercial ability
All the research has been done upfront
An ideal geographical location
Understanding and embracing the franchise model

The Seven Deadly Sins of Franchising

Neglecting the basic expectation of business success and customer service
Choosing franchisees incorrectly
Not having a training plan
Not having an Operating Manual
Not providing support
Not adapting to the local market
Poor financial performance evaluation

What characteristics should a franchisor look for in a franchisee?

120% commitment
The franchisee makes decisions proactively within the established limits
The franchisee acts as the “eyes and ears” of the customer – they listen to customers’ feedback & needs and adjust their next steps accordingly
Compliance with brand guidelines
Be open to change
Be disciplined and respect the conditions of the franchise.

What are the characteristics of a good franchise?

Provides support to franchisees
The business is organized and prepared for franchising, so the franchisee can fully receive the parent company’s know-how.
Builds brand for more recognition and greater positioning
Continuous innovation and development
Always gives support and direction to franchisees