Want to be a business owner? Franchising could be the answer.
If you’ve always dreamed of starting your own business, you’ll understand just how difficult it can be. There’s often obstacles standing in the way and overcoming them isn’t always easy. Franchising, however, is an exciting alternative. While the terms of your franchise contract may prevent you from having complete creative control over how the business grows, the franchise model offers entrepreneurs a way around many of the problems faced by other new companies. Here, we take a look at five ways that franchising could provide the solution and allow you to become the owner of your very own business.
Start your own business with a franchise - why?
1. Franchising facilitates collaboration
One of the key benefits of franchising is the potential for greater cooperation and coordination with other business owners. Entrepreneurs attempting to establish and expand their own business often find it difficult to collaborate with or learn from, other business owners. To a large extent, this is a side effect of the fierce competition that exists between companies operating in the same sector. Business owners are understandably worried about giving competitors an edge by sharing their expertise and experience.
With franchising, collaboration is an essential feature of the business model. Franchisees collaborate closely with their franchisor and network extensively with other franchisees. Conferences, workshops, and seminars play an important role in providing business owners with the skills and tools required to succeed, and collaboration is encouraged at every level. In some cases, franchises use a mentor system to guide new franchisees through the initial setup stages. Outside of the franchising system, this is much harder to achieve.
2. Management will take an interest in your performance
As a franchisee, it can be incredibly difficult to find people to work with that are just as passionate about the project as you. Fortunately, all good franchisors take a keen interest in how their franchisees are performing and whether they’re experiencing any serious problems. As the franchisor and franchisee relationship is mutually beneficial, both parties are interested in making it work. No one party has a greater responsibility, and both understand that their profit margin is dependent on working closely together.
When you’re first researching franchises and trying to decide which offers the best chance of success, it’s important to consider how the franchisor will support you as your business grows and expands. An excellent way to determine the extent to which they'll take an interest and offer guidance is by talking to existing franchisees. Most of the time, franchisees will give you an honest appraisal of how the franchise helped them build their business, and this gives you a better chance of making the right choice between franchises.
3. Franchise system is designed to facilitate growth
All businesses, whether they're a franchise or not, want to grow, expand, and go on to bigger and brighter things. This is one of the most critical challenges faced by entrepreneurs. Franchising is a tried and tested method that is specifically designed to facilitate the growth of a business. It’s often used to allow a fledgeling business to expand aggressively into new areas before others take advantage of gaps in the market.
Franchisors are also keen to have existing franchisees take on the additional responsibility of extra franchise units. Rather than training a new franchisee and then painstakingly guiding them through the setup process, experienced franchisees have already gained the experience necessary to set up a new unit. This means that there's a clear route forward for franchisees that want to begin building a legacy and expand their business quickly and efficiently.
4. Share the risk
Though the franchisee is ultimately responsible for the success or failure of a franchise unit, the franchisor has an enormous responsibility, too. If their attempts to open new franchise units repeatedly fail or stumble across obstacles, their profits will fall, and they'll find it much more difficult to attract new franchisees. This means that both parties share some of the risk involved in opening a new business and both are invested in its success.
Even the most affordable franchises understand that their business will not survive if they don’t invest in providing their franchisees with the necessary tools and skills to succeed. This acceptance of shared risk ensures that both elements of the franchisor/franchisee relationship are pulling in the same direction and have the same goal.
5. Easier franchise financing
One of the most significant obstacles faced by entrepreneurs is finding the required funding to get their business off the ground. In the current economic climate, the banks are hesitant to lend, and more and more business owners are looking for alternative sources of investment. Sometimes they have to borrow from friends and family, in other instances they have to devote a disproportionate amount of time and effort to drumming up support.
With franchising, it's far easier to find financing. Many of the larger national banks have dedicated franchising investment funds and are far more comfortable lending to a new business owner that's backed by an experienced and already successful organisation. In some cases, it’s possible to borrow 50-70% of the initial investment from a lender. Most British Franchising Association (bfa) accredited franchises are supported by major lenders, and new franchisees will find it far easier to secure funding if they sign up with one of these franchises.
The principal advantage of the franchising system is that new business owners are supported by a large-scale organisation that has plenty of resources, experience, and expertise at its disposal. This allows it to equip new franchisees with the tools they need, ensure that applicants have easy access to financing, and increases their potential for growth. It also means that they’re invested in a franchisee’s success and are just as keen to make it work as their new partners. Franchising is a system that’s designed to encourage growth and expansion. Consequently, franchises work hard to remove obstacles and impediments that may stunt growth or prevent their franchisee’s from succeeding. For this reason, it’s an incredibly appealing prospect for any future business owner.
The Editorial Team, Point Franchise ©
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DEVELOPING YOUR OWN BUSINESS IN FRANCHISING