The economic climate in America appears to be stabilizing. If economic forecasts are accurate, the American GDP will grow by 2.5% in 2012. Some economic forecasters also believe that America will finally manage to pull itself out of the recession in 2012.
So, where are the investment opportunities in a recovering market? The stock market? Many will continue to see it as too risky. What about real estate? With the rate of foreclosures, the abundance of inventory and the instability of prices, real estate is an unlikely opportunity. Where then is the opportunity?
One promising area is franchise opportunities. Buying a franchise allows an entrepreneur to have ownership and the potential for significant income. Many consider buying a franchise superior to other start up business.
Why is choosing a franchise business often a better option than other start up businesses?
1. Every business has a learning curve. In most start up businesses the curve is steep because the operating processes, marketing plan and branding have to be developed and implemented. With franchising the franchisor has already developed the processes, marketing, branding and has established a training program for the franchisee. Additionally, prior to buying the franchise, the franchisee has an opportunity to learn all about the documented successes and failures of the franchise opportunity from the franchisor and from conversations with existing franchisees.
2. Getting financing for a franchise business can be easier than with other start up businesses. Lenders are hesitant to lend money to a business that has no track record. The franchise model offers the lenders a more established business model and a history that they can use in the evaluation process.
3. A franchise business receives ongoing support from the franchisor. The franchisor trains the franchisee and their employees and equips them with the tools that will aid in their success. New businesses must rely almost exclusively on the resources and knowledge of the new business owner.
4. Start-up businesses can struggle to find the right vendors who will sell them the right materials or products at the right price. A franchise provides a network of established vendors and is able to utilize an economies-of-scale in purchasing which can contribute to considerable savings for the franchisee.
5. An individual start-up business has no established brand value. New business owners have to invest heavily in marketing efforts to get the word out. There’s no guarantee that the marketing will attract the target customers and build the brand. With franchising, the brand is already established and the target customers have already been identified. In most cases, the marketing costs are shared by the franchisor and the franchisees.
6. According to a Price Waterhouse Coopers (PWC) report, the total number of franchise business establishments are expected to grow in 2011 to 784,802 units and employ 7.8 million Americans. In 2010, the corresponding figure was 765,723. Corresponding numbers for other small businesses are not available.
7. Prospective franchisees should know that they will be required to pay royalty fees to the franchisor. Those that become franchisees have obviously determined that the benefits of branding, ongoing support, training, vendor development, economies-of-scale and other advantages, are worth the cost.
8. According to statistics published by the U.S. Department of Commerce and Trade Administration, a franchise business has a 90% chance of succeeding while a non-franchise start up business has a 15% chance of success.
9. Ongoing interest in the franchise business model is high. According to one estimate, 300 franchises are purchased every week in the U.S.
10. The franchisor maintains a vested interest in helping its franchisees become successful because the franchisor is obligated to report its successes and failures to the public in its Franchise Disclosure Document (FDD). If the franchisees are successful and growing, so is the franchise.
11. A franchisee is also networked to other franchisees in the company. Such networking is invaluable because the franchisee learn about new trends, marketing approaches and best practices that will aid in success.
These are some of the many reasons why franchise businesses continue to be popular even in an uncertain economy.
Let us help you explore your options. We have access to more than 300 great franchises across all industries. Some are surprisingly inexpensive. We also have access to many franchise lenders that will provide funding for qualified buyers.