Retail Shops: Develop Your Own with a Franchise

20/09/2018 08:00 | Start a business

retail shops

If you already own and run a business, you may think it's too late to get into franchising. However, this is definitely not the case. Many franchises offer existing business owners the opportunity to convert their company to a franchise unit. Typically, they do so at a reduced rate. Here, we take a look at some of the main advantages and disadvantages of this process and ask whether it's the right move for your business.

Five advantages of converting your business into a franchise

1. Brand recognition

One of the significant benefits of the franchising system is the ability to use the franchisor's name and brand identity as your own. For many small start-ups, the hardest part of getting a business on its feet is developing a strong identity, ensuring consumers are aware of your products and services, and establishing a presence in a market.

When converting your business into a franchise, you'll reach a much larger audience, and your brand will resonate with many more people. This can make an enormous difference to your profitability and dramatically increase the number of customers coming through your doors.

2. Experience

There are some things that you can only learn through experience. Though franchisors do offer a significant amount of training and provide franchisees with ample learning opportunities, its the amount of experience theyve accumulated over the years that is really valuable. Whenever you have a question or problem, the franchisor should be on hand to provide advice and support. This guidance is incredibly rare in the traditional business environment and the importance of having an experienced franchising figure to assist you should not be underestimated.

3. Purchasing power

Businesses are stronger together. One of the main reasons this is true is that larger organisations have higher purchasing power. In other words, they can utilise economies of scale to offer more affordable products and services. This is vital in competitive markets, where even the slightest price differentials can have a dramatic effect on the likelihood of your business succeeding.

Even if you're not a traditional retailer, bulk buying and increased purchasing power can reduce your expenditure. Whether it's purchasing supplies, having your fleet of vehicles serviced together, or when you buy equipment, being part of a larger purchasing entity ensures your business pays less.

4. Marketing muscle

If you want to get your message out there, you need to be able to rely on a professional marketing department that has access to both the resources and expertise required. Marketing may sound simple, but advertising needs to be refined and targeted if it's to have any impact on the modern consumer. Consequently, your business can benefit enormously from a franchise's established marketing team and the experience they've accumulated while building their brand.

5. Access to support systems

Finally, one of the most significant advantages associated with franchises is the access they provide to their comprehensive support systems. Though every franchise varies, they'll often offer guidance on finding a location, fitting your store, applying for finance, and hiring your team, amongst other things. Many business-orientated individuals opt for franchising because they value this support above all else and would struggle to run their own business without it.

Three disadvantages of converting your business into a franchise

1. Loss of control

This is the biggest disadvantage of turning your existing independent business into a franchised operation. Once you've signed the franchise agreement, you'll have to follow the franchisor's business plan and will have far less control over the direction the business takes and what processes, procedures, and systems you have to use.

However, this isnt necessarily a terrible thing. Many business-orientated individuals thrive within the framework provided by their franchisor. Others dont appreciate that the franchise system depends on the business plan being followed to the letter and feel restrained as a franchisee. It just depends on what type of individual you are.

2. Additional fees

Alongside the loss of control, additional costs are the other main drawback of the franchise system. Franchisees have to pay an up-front franchise fee (which may be lower than usual, because youre converting), as well as monthly royalty fees. Though this is the price you pay for access to the franchisor's business model and brand, regularly paying these fees cuts into your profits and can take some getting used to.

Many franchisors also charge an additional marketing fee to cover the cost of advertising. All of these expenditures need to be accounted for when you carry out your due diligence, as all franchisees need to ensure that theyre making a financially viable decision.

3. A more complex relationship

Finally, its important to recognise the fact that signing a franchise agreement means youre entering into a more complex business relationship. Whereas independent businesses aren't dependent on anyone (except maybe their lender), franchisees are very much reliant on their franchisor.

The franchise agreement affects every aspect of your business plans, and it's vital that you're prepared for that. It's no longer easy to walk away from your business or sell it on to someone else your franchisor will have a say in any such decision.

Retails shops to let

If you're looking to turn your business into a franchise, you may need to think about what you'll need to change to become a franchisee. It may be necessary to move to a new location to meet the franchise's recruitment criteria, in which case it's essential to keep an eye out for retail shops currently for let. Converting your business into a franchise can be an excellent opportunity to start afresh, so it's something to consider.


Conclusion

There are numerous benefits to converting your business into a franchise unit and only a few drawbacks. While there is some loss of control, business owners benefit from better branding, powerful marketing departments, and comprehensive support systems. For those who need a little help running their business, franchising is the perfect business model.

Other recent articles

0 Comments

post a comment

Characters remaining: 250