In recent times, franchising is one of the fastest-growing businesses opportunities. There are franchises for all types of products and services, such as, pet grooming, food, auto repair, massage services etc. Franchises also tend to have a higher success rate compare to independent businesses that are not franchises. Even though franchises tend to have higher success rates, they also have risks, and can fail for any number of reasons like any other business.
So you think you want to buy a franchise but you’re not so sure it would be the right choice. After all, why should you spend a premium on a big name when you can just duplicate their efforts? Think again. There are a few good reasons why copycatting doesn€t work, and in hard economic times, these reasons make even more sense. We can’t say enough about the security factor of choosing to invest in a franchise as opposed to a new start up.
Expanding a business can be accomplished through opening additional company owned operations or through franchising. Franchising is far superior to opening additional company owned stores and ultimately more profitable. Franchising is the best way to expand a business.
The central idea behind franchising is to recruit people to refer your brand to other customers. If you own a company and want to improve on its marketing and brand appeal, you can leverage the concept of franchising really well. In such a business model you enter into an agreement with a franchisee (the person who will do the marketing for you). As per this agreement, you need to supply the franchisee with marketing and promotional materials as well as provide all the necessary training needed to enhance the brand appeal. In addition, with every successful sale that happens, the franchisee will earn a commission. The percentage can be fixed based on mutual consent.
Your business is based on a proven idea. You can check how successful other franchises are before committing yourself. You can use a recognized brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise – the ‘franchisor’. The franchisor gives you support – usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice. You usually have exclusive rights in your territory. The franchisor won’t sell any other franchises in the same territory. Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation. You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network. Relationships with suppliers have already been established.
Avoiding the unnecessary trial and error period in starting and operating a new business. Lower financial risk, compared to other ventures, because investment costs are lower and profit margins are higher. Business Format Franchising complete packages ensure a ready to go €turn-key€ franchised unit. Managing a small business whilst depending on the power of the franchisor company which has a bigger organization. The franchisee has an opportunity to run a proven business concept with a successful operational track record. The opportunity to learn the latest developments and changes in the local and global market from the franchisor and focus entirely on developing the sales revenues. The benefit of operating under a recognized trade name/trademark, which can have better marketing results. The franchisee has access to accumulated business experience and technical know-how in managing the business. A unified store design which leverages the business reputation in marketing the concept. Easier purchasing, storing, and product display systems.
A franchise is defined as an agreement between the franchiser and franchisee, wherein the individual buying into a franchise will market a product or service created and provided by the franchisor. It is a form of business ownership where you are halfway functioning as your own boss, as a business owner, but also working within an established organization and system. Franchising offers business owners the ability to work for themselves, but with the security of an existing framework and support to help them achieve success. However, franchise is not a magic formula, and franchisees will still have to have strong entrepreneurial skills and the dedication to ensure the business functions to the best of its ability.
Franchising is about minimizing risks and maximizing returns. It has often been said that franchising allows entrepreneurs to be in business for themselves, but not by themselves. A quality franchisor provides proven operating systems, solid research and development, established marketing methods and instant credibility – plus extensive training and support – all of which can reduce risk and build success more rapidly and affordably than in an independent business.
The franchisee can tap the services of the parent company anytime he needs assistance, although running his own business. Whenever he needs help, the services of the head office organization are available to him, too. Furthermore, many companies have field operations personnel whom the franchiser can call on to help him deal with any problem he may encounter in the operation of the business.
Nowadays, most franchises being offered are turnkey operations. The franchisee receives the equipment and supplies required in running the business upon the signing of the franchise agreement and payment of the franchise fee. Moreover, for the new outlet, the franchisor provides assistance in identifying a good business location. The company helps the franchisee in preparing plans for outlet layout, furnishing his store, shop fitting and negotiating his lease. For the opening of the business, it also provides assistance in determining the appropriate stock inventory.
A Few Advantages:
1. Branding
The first thing Franchises offer franchisees is a strategic identity that is not only effective, it has cumulative market impact. Corporate Brand Identities are proven. Mega-brands like McDonald’s and Dunkin’ Donuts have literally spent millions on their brandings and logos and the franchisee gets to take full advantage. Most Franchisors have already survived decades in their respective industries and are easily identifiable to the public. A successful brand is one that is remembered, and Franchises have some of the most successful brand identities in the world.
2. Advertising
Advertising can be one of the biggest expenses for any new business and for good reason. You can’t survive without effective advertising and effective advertising is expensive. These days, even if you have a prime location, if customers are unfamiliar with what you have to offer they won’t come in. Franchises offer national advertising campaigns that are included in your franchise fee. This is a huge benefit when considering a franchise.
3. Name Recognition
People today want guarantees like never before and name/menu/brand recognition gives them that assurance. Everyone knows what to expect when they stop at your franchise because the majority of them are repeat customers even if it’s the first time in your store. You get to take advantage of the fact that a family from out-of-state, for instance, who has previously enjoyed your franchise’s products and services, will think nothing of visiting your facility because of their past positive experiences. In fact, like an old friend, they are counting on you to be there.
4. Reputation
Next to Advertising and Branding, a Franchisee enjoys the protected reputation of the Franchisor. I say protected because there are designated legal departments that take care of the inevitable issues like lawsuits, accidents, and difficulties with employees. The reputation of the franchise is important enough, it is what breeds positive expectations that keep patrons loyal, but this benefit coupled wit