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The US boasts three-quarters of a million franchises that employ nearly eight million people. When entrepreneur-minded people seek a business of their own, the best choice is often a franchise. Why? Because franchising offers advantages that a start-up cannot provide. And those advantages are good reasons to invest in a franchise.
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Reason #1. The Brand.
It is difficult to determine if your idea for a business will be recognized and accepted by customers. A franchise brand has already done this for you—you just maintain it. Plus, a recognized name, logo, and product means that prospective customers already know what you have to offer before you ever up the doors.
Reason #2. Marketing.
Franchisors offer national advertising that strengthens and supports the brand. They do marketing research and develop a consistent message that drives people to your site. All franchise business owners share the costs with money pooled from franchise fees.
Reason #3. Training.
With a business model that works, a franchisor provides training to its franchisees. Both pre-opening and ongoing education is instrumental to franchisee success. It also ensures consistency for the franchisor’s brand.
Reason #4. IT Support.
You might be tech-savvy, but unless technology service is the franchise sector you seek, your time will be spent building a customer base, not choosing payment systems or fixing computers. In many industries, franchisor systems provide technical support, established POS systems, and integrated technology to streamline back-office tasks.
Reason #5. Economies of Scale.
The supplies and inventory needed to operate your franchise are less expensive because the franchisor gets bulk discounts that would never apply to a small start-up. A small business in a large franchisor family has a lower cost of goods. Lower expenses mean an easier path to profitability.
Reason #6. Easier Financing.
Once again, an established and successful franchisor is viewed positively by lenders. Risk to lenders is reduced when the borrower is part of a proven business model, and they are more likely to approve business loans.
Reason #7. Greater Success.
One in five new businesses fail in the first year, but a franchise is part of something that’s already been successful. For you, that means a proven business model to replicate as a new franchisee.
Reason #8. Growth Options.
An entrepreneur can open more locations, but many obstacles would still exist (an unknown brand, higher cost of goods, marketing costs). With a franchise model, choosing to buy a second location has all the benefits of the first location already in place.
Reason #9. Saleability.
When the time comes to sell your franchise, you have a recognizable product for other investors. And since a franchisor has a vested interest in your buyer, they can help find a qualified and capable replacement for you.
The benefits of a franchisor business model are numerous. It’s much easier to duplicate a successful brand than reinvent the wheel on your own. With hundreds of franchise industries, you can find a business partner in a franchisor who offers many reasons to invest in a proven brand.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.