WHY BUY A FRANCHISE?
So, you think you may want to buy a franchise, but you’re not convinced. After all, why should you pay a franchise money when you can just start your own business? Below I have listed just a few of the advantages of buying a franchise.
A Better Chance To Succeed With A Proven Business Model
Franchises offer an established business model that has proven to be successful, so that you don’t have to reinvent the wheel. Although experts disagree on the exact figures, statistics have shown in the past that franchises enjoy a higher rate of success when compared to standalone businesses. Also, you don’t necessarily need business experience to run most franchises as the franchisors usually provide the training and support you need to operate their business model. This is a big advantage as the process of opening and operating a privately-owned business can be complicated and daunting, especially for first time business owners.
The Power of The Franchisors Brand
Franchises offer a strategic identity that is not only effective, but also has a cumulative market impact. Corporate brand identities have proven success in the marketplace. Franchised businesses spend huge sums of money over many years developing successful brand identities throughout the world. The franchisees get to take full advantage of this market image and the name recognition that comes with an established brand.
Advertising can be one of the biggest expenses for any new business and for a good reason – you can’t survive without effective advertising, and effective advertising is expensive. Even if you have a prime location, if customers are unfamiliar with the products and services you offer, they won’t come in. Franchise systems usually offer national advertising campaigns which is a huge advantage for their franchisees.
Even brand-new franchisees can immediately benefit from the franchisor’s experience and tested operating systems for opening and running their business. Franchisees are provided advanced training and documented standards and procedures to help them operate every aspect of their business including opening inventory levels and grand opening marketing strategies. Additionally, a new franchisee can network with other franchisees in the system, who have already opened and operated franchise locations and can offer advice. Most franchisors also provide and maintain a website along with SEO support. Franchise systems also offer increased purchasing power, which can result in lower costs for supplies, inventory, and other goods. In Summary, Franchises offer the independence of small business ownership supported by the benefits of a big business network.
Frequently Asked Questions
How does franchising work?
A franchise owner (the franchisor) typically allows the investor (the franchisee) to purchase a license that allows them to become a local business owner/operator using the franchisors proprietary business system, usually within a given territory. This initial license purchase, usually called a “franchise fee” also covers the franchisees’ initial training which is often held at the company headquarters. If required, the franchise also helps with the site selection and buildout for the physical location. Franchises also do a lot of demographic research to carve out desirable territories for their owners. Then, on an ongoing basis, franchisees typically receive marketing, website and general business support as well as the use of the franchisors brand, trademarks, software and proprietary tools. In return for all of this, the franchisee pays a small percentage of sales (called royalties) to the franchisor on a monthly basis.
What should I know before buying a franchise?
Some things may seem obvious: Does the franchise have a track record of success? Are their franchisees happy? What is the cost, and what skills and or experience are required (if any)? Also, do you want to work near, or perhaps in, your home? You also need to understand the hours and personal commitment that will be needed to run a specific franchise. However, other important factors may not always be so obvious. For example, does your personality fit the business – do you need to be outgoing or very empathetic, or detail oriented or have strong sales skills? Signing on with a franchise that’s a bad fit can have disastrous results. We can help you!
Is Franchising Right For Me?
Do you have good people skills to communicate with clients, employees and the franchisor? Are you self-motivated? There is no substitute for hard work and any new business owner must be willing to do whatever it takes to succeed. Most importantly, can you follow a system? In a franchise, someone has already gone through the trial and error to develop a business model that works and has a proven track record of success – all you need to do is follow that system. In other words, in franchising, you are in business for yourself, but not by yourself – and therefore you don’t need to reinvent the wheel. So, if you have people skills, don’t mind working hard and can follow a system, then franchising may be a good fit for you.
Do franchises qualify for SBA loans?
SBA loans are business loans guaranteed by the Small Business Administration. This government agency provides loan guarantees through SBA approved lenders – usually banks. Actually, about 10% of all SBA loans go towards franchise financing - and almost all of the franchises that we work with are SBA approved. If you are interested, we can introduce you to an expert to discuss your funding options. Getting preapproved for a loan can help you determine you investment level before you start searching for opportunities
Professional guidance for individuals researching franchise opportunities.
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