In order to hit the ground running, buying a business can be a great way to start. Here we...read more
Striking out on your own is a daunting task. There are a lot of risks involved that can make entrepreneurs hesitant to finally make the leap and become their own boss. If this is the case for you, franchising may be the perfect option.
You will, of course, need to consider the type of franchise and your particular circumstances to really understand if franchising is the best option for you.
Most franchises have seen a huge success rate, but it’s not the case for everyone. Just like any other business, it requires a lot of hard work, good customer service, time management, enough money, and making informed decisions.
That’s why it’s important to compare the advantages and disadvantages of franchising before becoming a franchisee.
With a franchise, you get a business that’s based on a proven idea. The franchisor has spent years building its brand. They have already tried and tested their ideas, operating systems, and marketing techniques, and know what works and what doesn’t.
In addition, your products or services already have an established market share, making market testing unnecessary.
Most franchisors provide a reliable support system when it comes to things like setting up the business, marketing, management, sales, managing accounts, and even offer ongoing advice.
This is especially beneficial to those with little or no experience within the industry.
A franchisor also provides employee training, which equips you and your staff members with the right set of skills to ensure smooth business operations.
Since they have an established recruiting and training program, they are able to attract and retain the best talent. Get to know the amount of support a franchisor is offering before deciding which franchise to invest in.
A start-up business takes years to build, especially in such a highly competitive market; plus, there’s no guarantee you brand will become an industry leader.
With franchising, you get instant brand recognition. Your products/services are already known and trusted in the market, which in turn provides a huge following of brand-loyal customers.
Over the years, the franchisor has established numerous business relationships that you can take advantage of. For starters, financing your business may be easier since banks are more willing to lend to an established brand.
Having a recognised brand name backing you up also gives you high bargaining power with suppliers and distributors.
Franchising costs may turn out to be higher than you expected. The initial cost of buying a franchise will depend on the franchisor. Inexpensive franchises are often little-known brands, which can be a real gamble.
Well-known franchises, which can guarantee success, are very expensive. On top of that, you might be required to make royalty payments to the franchisor and even an additional fee for services provided like marketing and sales support.
When you buy a franchise, you are required to run your business following the parent company’s corporate policies and operating procedures.
Depending on the agreement, the franchisor might dictate things like product pricing, resale terms, hours of operation, and location of the business.
The franchisor also gives little leeway when it comes to decision-making even at the local level. This may hinder your ability to make changes that might bring about business growth in response to the current local market.
Running a successful business requires a particular set of skills. Starting a business by yourself means you have to master them all, which is not easy.
On the other hand, buying a franchise allows you to fulfil your dream of being a business owner with the support of the parent company.
For the aspiring entrepreneurs looking to start a business with a higher success rate, franchising might be the best option for you. To make sure it’s a success, however, you will need to find the franchise that is right for you!
By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.