Choosing to buy a franchise is a huge decision to make. There are so many things to take into consideration, as franchising isn’t for everyone. But many put off taking the leap as a result of nervousness or lack of confidence. So, to help reassure you, we’ve compiled a list of 20 reasons why you should make the business move.
- The odds are stacked in your favour. According to the British Franchise Association-NatWest Franchise Survey 2015, 97 percent of franchisees report profitability. Failure rates are extremely low among franchises, compared to independent businesses.
- You know what you’re letting yourself into. When entrepreneurs start a new business from scratch, there are so many unknowns. Thankfully, buying a franchise reduces lots of these uncertainties. As long as you perform your due diligence and review the franchise agreement with a specialist franchise solicitor, there should be no surprises.
- You don’t need to have industry experience. In fact, you don’t even need previous experience as a business owner. Franchising gives you the opportunity to do something you’re passionate about without having any prior knowledge or involvement in the industry you’ve chosen to invest in.
- You can explore new sectors. Because you don’t need previous experience, you don't have to limit yourself to industries you've worked in before when you’re choosing your franchise. You have the opportunity to start something entirely new, whether it’s a business that’s more aligned to your skills and character, or a passion project in a sector you’ve never experienced before.
- It’s easier to secure funding. Banks recognise that franchising is a much safer route to business ownership than starting an independent business. Because of this, most prospective franchisees find it relatively easy to secure the necessary funding to purchase a franchise.
- The system has already been created. One of the most compelling reasons to invest in a franchise is that the system has already been developed. You don't have to build the necessary infrastructure or support network for your business because all the hard work has been done for you.
- You get help to find the perfect location. Location is closely bound to the success or failure of a new business. Finding the ideal spot can be overwhelming, but franchisors have specialists on hand to help you pick the best possible place for your franchise.
- You get assistance to fit out your new business premises. As well as helping you to find the right location, the franchisor will also help you with the fit-out your new premises. You’ll receive support to make sure you get the fixtures and equipment you need to maximise the efficiency of your franchise investment.
- You have a ready-made customer base. Often, franchises have already developed brand awareness among consumers. This gives you the benefit of customer recognition, which would take many years to develop with a new business venture.
- Most of your marketing is taken care of. Investing in effective marketing campaigns can be financially draining for new start-up businesses, as it takes a significant amount of time, money and effort. In the franchise model, much of this activity is performed by the franchisor. You may be expected to contribute towards a central marketing fund, but you'll benefit hugely from the national brand awareness promotional activity.
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- You can decide when and where you work. In the early days, you may have to put in a lot of hours, which means you might be working late nights and weekends. However, once your business is up and running, you’ll get to manage your schedule to suit you. This means that you get the flexibility that can be difficult to achieve in other work environments.
- You can learn from mistakes your franchisor has already made. Running a business can be tough at the best of times and making mistakes along the way is almost inevitable. The good news is, although errors will happen, you don’t have to make the same ones the franchisor made, as you can learn from their oversights. In all likelihood, the biggest and most consequential mistakes will be behind the business, and the ones you’ll make in the future will be small in comparison.
- You join a team of franchisees. If you own an independent business, you often have to work through your problems alone. But when you join a franchise, you become part of a network of franchisees. If you encounter any challenges, you can rely on the advice and support of more experienced franchisees who have probably ‘been there, done that'.
- You get to attend franchise exhibitions. Franchise exhibitions are an excellent opportunity to hear from experts, receive additional training and meet other franchisees. Very often, entry is free and provides an invaluable chance to network and learn from franchise professionals.
- The franchisor has your back. There are always new developments in the world of franchising, and it can be challenging to stay on top of things when you're busy running your business. Thankfully, franchisors will always keep you informed of any regulatory, legal or industry-specific changes that will affect your franchise.
- You have access to experts. One of the enormous benefits of franchising is the team of experts that the franchisor will have recruited to support you and other franchisees. This support team aims to understand what is and isn’t working within the franchise model and then share this knowledge with franchisees.
- Help is at hand. Running a franchise can be tough at times but most franchises have helplines you can contact at any time, should you need advice or guidance.
- You’re in control of your future. Buying a franchise puts you in control. You get to decide how quickly you grow your business, whether to invest in additional franchises, or whether to just create a profitable business and sell it on at the end of the franchise term. The point is that no one else influences your destiny.
- There’s an opportunity to grow. If you make it as a successful franchisee, you may wish to expand your business. Growing is much easier in a franchise, as you can purchase additional outlets or territories once your original franchise is established. Becoming a multi-unit franchisee can be challenging at times, but also lucrative and rewarding.
- You can feel proud. One of the best things about being a franchisee compared to working for someone else is the sense of pride you’ll feel when you’ve built something of your own. When your franchise experiences success, you should be proud that it’s all down to your dedication, abilities and effort.
Why you might be wary
It wouldn’t be right to give a list of advantages of franchising without mentioning some of the drawbacks. Franchising is the perfect career move for some entrepreneurs, but that doesn’t mean it’s ideal for everyone. It’s definitely not worth jumping at the chance without first weighing up the pros against the cons. If you do, not only will you risk wasting your own time and money, but damaging the reputation of your franchise too.
So, here are a few of the potential drawbacks associated with the franchise model:
- You won’t have creative control. When you buy into a franchise, you buy into its business model and operational strategies. The franchisor knows that the specific processes they use have a direct influence on the success of the business, so you’ll have to adhere to them if you’re to become a franchisee. This may include using a specified list of suppliers or presenting your products to consumers in a particular way, for example. By doing this, you’ll maintain the consistency of the brand and, therefore, consumer trust, which will boost your profits.
- You’ll have to pay fees. As you’re benefitting from another business owner’s hard work, you’ll be obliged to pay fees to the franchisor. On top of an initial franchise fee, which goes towards the training and support provided when you first join the business, you’ll be required to pay ongoing royalty fees throughout the term of your franchise contract. This is usually calculated as a percentage of your sales income, so it should rise and fall as your profitability does. Some franchises also ask for a regular marketing fee to subsidise nationwide promotional activity. Although this will cut into your monthly budget, it should mean you make more sales, as raised brand awareness can only mean good things for your business.
- Other franchisees’ bad performances may decrease your profitability. Just as brand-wide marketing can boost your income, negative performance from another franchisee can also affect it. If consumers are disappointed by their experience in one franchise outlet, they’re unlikely to visit yours in the future. They’ll assume that the products or services you offer are identical, even if you uphold higher standards. This is why the franchisor’s strict operational strategies are so important. This final disadvantage is just a risk and the situation may not materialise if you do become a franchisee. It should by no means be the reason you decide not to start a franchise, but it’s important to bear it in mind.
Alice Tuffery, Point Franchise ©