What constitutes a franchise, and how does it work? When planning to start a business in Nigeria, these questions may come to your mind.
If you are interested in starting a business in Nigeria but do not want to go through the challenges and stress of growing the business from scratch, a franchise may be an excellent option for you.
It allows you to own a business that is already stable and popular; this way, you won’t have to face too many risks with establishing and growing your business. So to know if this is what you would like to get involved with or if you would rather start your business from scratch, carefully go through this guide for a detailed explanation of what a franchise entails.
What is a Franchise?
A franchise is permission, right, or license given to a company or person by a bigger company or a manufacturer. This permission or right allows the beneficiary to sell goods or services that belong to its benefactor for a given period.
To get this permission, you need to pay a given amount to an already popular and established company or manufacturer so you can use their name, logo, operating system, and trademark to run your business.
If you buy a franchise from another company, you will be the franchisee, while the company you purchased it from will be the franchisor.
In addition, even though your company may seem like a branch of a bigger company, you will still have full rights to make decisions within your company, and the franchisor will not interfere with your daily business operations.
However, for the fee you paid, the franchisor will help you with some important aspects of your business, including scouting for a good location, operational training & support, marketing & advertising, financial guidance, etc.
Highly-Profitable Franchise Opportunities in Nigeria
In Nigeria, there are many foreign and local franchise opportunities; you can even buy one from some small businesses as long as it serves the purpose of your purchase.
However, some industries are very profitable and have many well-known companies, and it would be best if you purchased your franchise from such sectors. Some of them are discussed below.
Mobile Device Franchise
Almost everyone in Nigeria, young and old, owns at least a mobile device, and they anticipate getting the latest versions every year. This is why sales of mobile devices are very profitable in the country.
There are many successful companies that manufacture mobile devices, including Tecno, Samsung, Apple, Dell, HP, Lenovo, etc.; you can choose to buy a franchise from any of them.
The good part about this mobile device business is that you can get multiple franchises from different companies and conveniently sell all their products together; people would still buy what suits them.
You should consider food if you want to sell something people cannot do without. Yes, restaurants, if properly managed, would not lack customers because while some people hardly eat out, there are still many people that barely cook by themselves.
However, most people prefer to eat at a popular and highly reputable restaurant. So compared to starting your restaurant from scratch, buying an already established identity from another restaurant may help your business grow faster since you will have people’s trust from the beginning.
Petrol Station Franchise
Millions of vehicles in Nigeria need refuelling daily, so a petrol station business will always be on trend.
You may not have noticed this, but some people prefer to drive a longer distance to fuel their cars at a reputable and trusted petrol station. Some examples of such petrol stations in Nigeria are NNPC, Oando, Total, Conoil, Mobile, etc. Now, think about what would happen if such persons could easily find the petrol station they trust at closer locations. It would be nice, right?
By getting a franchise from any of these reputable and popular petrol stations, you can provide the opportunity for people to have their trusted stations around them, and you would be able to earn more profits compared to starting your own with a new identity.
Like petrol stations, people also have transport companies they trust and enjoy their services. The commonest means of transportation in Nigeria is by road, and not everyone have cars to move about or travel privately, so they must patronize public transport companies.
Some transport companies in Nigeria will allow you to buy franchises from them, giving you the permission to rebrand your vehicles and open a business office with their identity. This will enable you to start your transport business with an established reputation, brand, and customer base.
How to Start or Buy a Franchise in Nigeria
Here are 8 simple steps to follow to start or buy a franchise in Nigeria.
Find out the Advantages and Risks of Starting a Franchise
Starting any business would cost a lot of money, and you will have to make a lot of preparations and put in a lot of work to ensure a successful startup. So it is vital to understand the advantages and risks involved before you invest your hard-earned money in a franchise.
In addition, this business strategy is slightly different from the usual business style most people are used to, so it comes with some added risks and benefits.
- Franchisors usually provide training and support to the franchisee, so you do not need much experience before starting a franchise.
- Your business will enjoy recognition and a higher success rate.
- You won’t have to do too much advertising and marketing as your brand would be an already established and well-known brand.
- Even though the cost of buying a franchise is worth the benefits you will enjoy, it is still costly, especially with the added cost of hiring staff, buying equipment, setting up a shop, etc. Many entrepreneurs may not be able to afford it.
- A franchise has some restrictions you may be uncomfortable with, for example, pricing, products, working hours, location, decor, etc.
Decide on the Franchise to Start or Buy
If you have now carefully studied the advantages and disadvantages of a franchise beyond what is provided in this guide and you have decided to start one for yourself, the next thing to do is to choose the type you want to start.
Many companies from different industries in Nigeria offer franchise opportunities; some may be more profitable than others, and some may be easier to establish than others. So it would be best to do thorough market research and consider your interest and expertise to know the best sector to buy from.
After you choose the best sector to invest in, you can now decide on what company to buy the franchise from while considering the cost, reputation, experience, and the level of assistance promised by the franchisor.
Write your Business Plan
The first you should consider in your business plan is the type of business you want to operate, whether a sole proprietorship or a limited liability company. Also, in your business plan, you should include details of everything that concerns your business, from goals to financial projections, marketing strategy, etc.
With a good business plan, you will be able to figure out how much you need for your business, and you can also pitch banks and other firms or investors for financing.
Starting a franchise may be more expensive than starting your own business from scratch because you will still have to invest in the same things a typical business startup requires after paying the required fee. So with this in mind, you need enough funding to start a franchise in Nigeria successfully.
To fund your business, you can apply for a loan with your local bank or other firms that grant loans to entrepreneurs, and you can also scout for potential investors.
Buy the Franchise
Once you have adequate business funding, you can now buy the franchise. It is better to go through this process with an attorney to ensure everything is done correctly. However, ensure you carefully review the contract and understand the terms and conditions before signing it.
Get Licencing and Permits
Getting the necessary licensing and permits would be best before you start operating a franchise in Nigeria. The licence and permits you may need for this business include occupational licenses, health permits, and tax registrations.
Choose a Location and Set up Your Shop
You are responsible as the franchisee for choosing a good location, renting a space, setting up your shop, and hiring staff. The franchisor will train you and your staff on how the business is operated and provide you with the signage, decor, and some other custom features associated with the brand.
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Starting a franchise in Nigeria is very lucrative and profitable; it will help you eliminate half the time and work needed to start a business from scratch successfully. However, before buying a franchise, ensure you hire an attorney to guide you through the due diligence process.
Now that you know what a franchise entails, you can buy one if it suits you and if you prefer it to starting a business with a new identity. Also, if this guide was helpful to you, kindly leave your thoughts in the comments section below.