Franchising is a business relationship wherein the franchisor grants an individual or company the right to use their brand, products, and services. There are many advantages and disadvantages to franchising, but here are the reasons why you should consider it.
Options
For anyone who wants to venture into franchising, there are several options you can choose from depending on your budget and expertise. From lawn care franchise opportunities to fast food restaurants, the industry will give you an abundance of choices so you can find the best one for you.
Lower Risk
When you establish your own business, you have to build it from the ground up. You have to work harder to encourage people to trust your business and create your own loyal following. With a franchise, those things have already been done for you. From day one, your franchise will already have an established brand and loyal consumers.
Moreover, the corporation already has systems and procedures that have been vetted and proven to work efficiently. You only have to follow what has been set for you and fellow franchisees. You are handed all the resources of a brand that has already established and made a mark for itself and, therefore, you have a higher chance of success than in a sole proprietorship.
Easier to Get Financing
Because there is a higher chance of success in franchising than starting your own business, it is easier to secure finance from a bank or other lenders. It is also significantly more affordable to buy a franchise rather than to start your own business. This is one of the primary reasons why entrepreneurs choose to go to franchising.
Initial Training and Ongoing Support
You do not necessarily need experience running a business to become a franchisee. You and your staff will get sufficient training from the franchisor at the beginning of the partnership, but it will not end there. Throughout your entire partnership, you will receive ongoing support that extends to the franchise’s operations as well as the continued development of products and services.
Lower Cost of Materials
Aside from not having to search and contact suppliers, your franchise will also benefit from group purchasing. Chances are, the materials you need to sell your products and run your business are cheaper due to the prior negotiation between the franchisor and the supplier. You may not get the same advantage if you start your own business.
Local and Nationwide Advertising Support
A franchise has the advantage of having a nationwide advertising campaign that small businesses typically do not have the resources to run. The franchisor usually provides the franchisees with the marketing and advertising materials so that every store communicates a unified and strong brand.
Franchisors also grant franchisors permission to perform local marketing programs, but plans need to be approved before they are executed. Moreover, the franchisor may provide an effective idea, through market research and expertise, that will guarantee an increase in sales.
Easy to Sell
Once you decide that franchising is no longer the right fit for you, it is easier to find a successor who will swoop in and continue running the store. It is important to remember that buying a franchise, even if it is from an established brand, does not guarantee success. While buying a franchise has a higher success rate than owning your own business, there is still a chance that you will fail if it is managed poorly.
Moreover, franchising has its own downside. For one, as a franchisee, you lose some controls over the store, from the design of the building to the products and services. There is little room for your own ideas and creativity. Before you commit, ask yourself is you can live with the disadvantages of franchising.
