Ever wondered about the benefits of buying franchise? Perhaps you are a private business owner. You may begin to worry for your business because the threat of larger firms is evident. You may have noticed a pattern in the last number of years, where the smaller private companies are struggling and dying out.

If you can relate to this, perhaps you should consider buying the franchise and continuing your business with strength behind you.

Let’s say you have decided you want to buy the franchise. The next obstacle you will face is trying to figure franchise to choose. Before you make your choice, there are some factors you will need to consider, to make the correct decision.

1.Areas to consider:

1.1 The price of the initial investment.

To buy into any franchise, you will need to come up with a lump sum upfront, and then various installments to secure the partnership. The investment will vary according to different franchises and different circumstances (location, competition, etc.) It is essential that you are familiar with price agreements from some different franchises, to make an educated decision.

1.2 The value of the royalties.

Having discussed the price of the investment for a franchise, you must be sure that the fees earned as a result of the investment, are of enough value to you that the investment can be justified. An example of some of these royalties may be a lower cost price for goods. You must be sure that the benefit of these royalties outweighs the cost of the investment.

1.3 Unique benefits provided by each franchise.

Each franchise varies from the next. You must consider how these variants are of benefit to your business. You must also consider how these variants would be of interest to your consumer. You must ask yourself what your primary goal is. For example, you may have to think whether your primary goal is profit maximization, or offering a low price for goods to customers.

1.4 Value proposition.

You should consider whether the franchise offers own brand products. In some cases, the business may be limited by the franchise as to what brands and goods they can deliver. Own brand products are often cheaper, but can sometimes be perceived by consumers as less of a luxury good.

You should also consider the value of the franchises name. Does the franchise have a reputable name? How many stores does the franchise owner? These factors link in with brand recognition which is very important to consider when trying to choose between franchises.

2. Irish Food Franchises

To give an example of the research, you should carry out before buying a franchise; We are using the leading Irish food franchise stores as an example. We have carried out some research where we explore the benefits of Spar, Centra, and SuperValu.

2.1 Spar

Spar owns a total of 365 stores nationwide.

Initially, French company Spar is one of the best-located food franchises there is. Simple Google Map search would reveal planned spacing with a radius that does not imply cannibalization of partnering shops. They offer access to a range of support services for businesses, wholesale and delivery services and marketing services. BWG Group (owners of Spar in Ireland) has extensive expertise in setting up and managing stores and store development.

Spar declares that independent retailers are not permitted to belong to any other voluntary trading group. Competition between BWG and Musgraves only fiercened after later acquired AMD Londis in the year 2016.

The Spar states that they can only recommend selling prices for products available from its distribution centers and via drop shipping (but not for products sourced independently). But minimum order rules often set pricing at a higher end for consumers. Spar have their store-brand products, but often their price is closer to what of the branded products with much higher investment into marketing and advertising.

Spar used to own the famous slogan ‘’Always there for you’’. However, in the last number of years, due to popular demand, Spar has brought back the slogan ‘’under the tree’’ at Spar. As company belongs to a larger group of few other food franchises, competition is present with other players like Mace. But this is not uncommon in this market segment in Ireland.

2.2 Centra

Centra has 425 stores nationwide.

They offer expertise in marketing support information, technology services and experience in retail. They provide your business with modern store design and layout. Recent upscale of their central locations should act as a sign that company is trying to shake off their initial image as value corner store while trying to leave space for the

They also offer assistance for range, merchandising and category planning to suit your store. Centra is a widely recognised franchise, it’s slogan being,’’always more to offer’’.

Centra brand is newer in comparison to Spar and was created as a direct reply to the Spar by its management group Musgraves, who specialize in the supply of products (both food and nonfood) to small to medium independent grocery stores. This might act as an advantage to the transition from the particular standard. Cetra also offers their own brand products in bigger stores that priced below the prices exercised by Spar.

2.3 SuperValu

Supervalu has 223 stores nationwide.

It offers management strategies and strategic acquisitions, information technology services and experience in retail. SuperValu has a reliable supply chain network. Belonging to the same family as Spar, Supervalu has a well-established name in rural Ireland as well as in all major cities. After premium store format of Superquinn proved challenging to maintain past 2008, Supervalu moved up to their position with well sourced local produce and specialty products.

It is a widely recognized franchise; it’s slogan being, ‘’real food, real people’’. The chain positioned closer to giants Tesco and Dunnes Stores than Centra and Spar. Supervalu mainly operates in bigger stores/ supermarkets. This franchise option may not be suitable for smaller private business without plans to expand. But if carefully selected offers loyal customer base as well as the range of creative community projects that further strengthen their position as a leader in the category.

We have carried out some research to see what value is offered to the customer by each franchise. We have filled the consumer price index basket with the following ten everyday goods to compare prices between each of the stores. The results are as follows:

Spar

Chicken breast 680g €8.29

Milk 2l €1.89

Bread white loaf  €1.89

Water 2l €1.59

Eggs 12 €2.19

Rashers 200g €3.00

Butter 500g €3.89

Sausages 12 €2.99

Tea 40s €2.49

Sugar 1kg €1.23

Total = €29.45

Centra

Chicken breast 680g €8.49  

Milk 2l €2.19

Bread  white loaf €1.79

Water 2l €1.69

Eggs 12 €2.20

Rashers 200g €3.00

Butter 500g €3.89

Sausages 12 €2.99

Tea 40s €2.29

Sugar 1kg €1.29

Total = €29.82

Supervalu:

Chicken breast 680g €7.99

Milk 2l €1.89

Bread white loaf €1.50

Water 2l €1.30

Eggs 12 €2.35

Rashers 200g €3.00

Butter 500g €3.99

Sausages 12 €2.99

Tea 40s €2.19

Sugar 1kg €1.19

Total = €28.39

Findings:

The best choice of the franchise is simply a matter of preference. Centra has the most stores nationwide. Supervalu offers the best price for customers.

When it comes to buying a franchise, there is a lot more than what meets the eye. Make sure you give an in-depth investigation of all possible franchises before committing to a particular one.