The Advantages Of Franchising

Many entrepreneurs turn to a franchise business as a way to become self-employed. This can be a very good choice for both novice business owners as well as experienced business owners, providing many advantages over starting a business from scratch.

Help and expertise

One of the biggest advantages of pursuing a franchise business is the help and expertise available from the franchiser. While this will vary from company to company, most franchisers will provide you with or help you acquire everything you need to start up and run the business. Common areas of help include:

• Location selection
• Construction and design
• Equipment
• Supplies
• Training
• Marketing
• Operations
• Management
• Hiring and employee relations

Some franchisers go so far as to make their franchises true turnkey businesses. In these cases the franchisee may be provided with an intact business operation, established territory and clientele, and even inventory and other supplies stocked up and ready for use.

Higher success rate

Investing in a reputable franchise operation greatly increases your chances of being a successful business owner. This is because you are buying an established and proven business concept, along with all of the support and expertise provided by the franchiser. In fact, some business experts estimate that franchisees have up to an 80% chance of success within the first few years of business, compared to a 70% to 80% chance of failure for those entrepreneurs who instead choose to start an independent business from scratch.

Lower supply costs

Most entrepreneurs face significant costs for all of the various supplies and materials they need to do business. Everything from office supplies to advertising to the products themselves typically cost more because a single business owner must purchase in small or limited quantities.

A franchisee, on the other hand, typically has lower supply costs because most of their supplies are purchased through or in the name of the franchiser. The larger purchasing power of the parent company means they can get better pricing on nearly everything a franchisee needs, and that savings is then passed along.

Established brand recognition

When an entrepreneur chooses a reputable franchiser, they get the significant advantage of established brand recognition. They do not need to go through the long and painful process of creating a brand, communicating it to the marketplace, and establishing a base of customers. The franchiser has already done that, whether recognition has been established nationally or regionally.

A good franchiser will reinforce the brand recognition on an ongoing basis as well, usually through advertising and promotion. A franchisee typically supports these activities through monthly franchise fees and marketing fees, but the costs are quite a bit less than if the franchisee were to take on these functions independently.

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