More than 30 percent of small businesses fail within the first five years of being open. This is largely due to the fact that start-up business owners have to figure out how to effectively run their business along the way.
That’s why many entrepreneurs turn to franchising; it offers the potential for rapid growth at minimum costs. Often times, franchise owners sign 10- to 20-year contracts with a strategic plan for expansion.
What is Franchising?
Franchising is a strategy for expanding a business. A franchisee pays a franchisor for the right to sell the franchisor’s products and/or services using the business’s proven methods, operations, systems, brand, and other intellectual property. Franchisors often provide ongoing training to support the success of the proposed business model.
Top 3 Reasons to Buy a Franchise
Although the established business plan has proven to be successful in the past, franchisors cannot guarantee the success of their franchisees. However, opening a franchise has less associated risk than starting your own business. Here’s why:
1) Turnkey Systems
Franchisors already have the experience and know-how to optimize business operations, including best practices and procedures. Established franchisors have survived in their industry through inevitable market and economical ups and downs.
Not only can they help you get your business up and running faster than most independent operators, but they can provide an educated projection for the necessary equipment, inventory, instructions and more to maximize chances for success.
2) Brand Power
Brand reputation and awareness are priceless in business, and franchises are some of the most well-known brands around the world. It’s why franchisees must follow the franchisor’s required standards for operating the brand and business. This ensures every customer enjoys the same experience no matter which franchise they visit. Here’s an example:
Tawny plans to travel home for the holiday season but wants to keep her baggage light. She knows how much her family loves Honey Baked Ham, so instead of purchasing one from the store down the street, she picks one up from a location near her family’s house. She knows she can count on every Honey Baked Ham location to provide the same sweet, golden-glazed, dinner-table centerpiece her family loves every time.
3) Extensive Support
Remember the support we told you about earlier? Franchisors often provide franchisees with ongoing support throughout their franchise journey, including one-on-one training, real estate advice, operational assistance and more.
Effective advertising is also a major expense that most small businesses don’t have the resources to fund. And most businesses can’t scale without it. National advertising and marketing strategies are some of the most powerful forms of support offered to franchisees, attracting customers to each location.
Another great way franchisors support their franchisees is through collective buying power. Since the franchisor can afford to buy supplies and inventory in bulk, they can share their savings with franchisees. This significantly cuts operating costs.
Best of all, there’s a network of franchisees who are on the front lines every day with you. They can provide moral support and advice when you need it most.
Ultimately, franchises provide growth benefits for both franchisors and franchisees. Franchisors want you to be successful because it means their business grows. If their business continues to succeed, it will attract more franchisees, and so on.