Why reinvent the wheel? Franchising could be right for you
If you’re struggling to decide between opening a franchise unit or starting your own independent business, there are several factors you'll need to take into consideration. Successful franchises are one of the best business opportunities you'll encounter and boast many advantages over independent startups. Here, we take a look at some different reasons why it's not necessary to reinvent the wheel and why going with an established franchise could be the best decision you'll ever make.
You don’t have to go it alone
If you ask most franchisees what it is about the franchise system that attracted them in the first place, a large percentage will answer with ‘the support and guidance provided by the franchisor.' In this regard, there are few business opportunities like it. When done well, franchising is an incredible learning opportunity, and franchisees will be in the unique position of learning and earning at the same time.
While the initial training period offered by most franchisors provides franchisees with the business basics, it’s the ongoing support that makes a difference. Franchisees can learn a great deal from an experienced franchisor and sometimes this experience will be worth the franchise fee alone. It’s also useful knowing that you don’t have to go it alone. As they set up their business, many independent entrepreneurs can feel isolated and unable to access sources of help, expertise, or experience. This contrasts significantly with franchisees, most of whom are made to feel part of a close-knit team.
Minimise the risk
The franchise model is designed to minimise risk. Potential franchisees have to go through a stringent recruitment process to join the business and prove themselves suitable for the role. They then have to show that they're financially responsible and able to fund the venture legitimately. Finally, the franchise agreement then sets out a series of criteria that defines what is and isn’t permissible as a franchisee. All of these safeguards are used to minimise the risk involved in the business and ensure that the franchisor is bringing someone who can handle the role onto the team.
On the other hand, independent entrepreneurs are exposed to far greater reward. In some cases, this may correspond to the potential for far greater reward, but it also means that there are a lot more things that can go wrong. They still have to pass some safeguards – such as justifying their business proposition before lenders – but there are far less stringent checks and therefore far more significant risks involved in setting up your own, non-franchised business.
You know it will work before you start
One of the key benefits of a franchise over an independent startup is the fact that the franchisee knows that they’re working with a proven business model. While other entrepreneurs have no such assurance, franchisees understand that they have a system that – as long as it is followed to the letter – will lead to profitability. This encourages a particular type of faith in the franchise and its business model.
The early days of an independent business are often defined by doubt and uncertainty, as there is no guarantee that the business is following the right path. This can cloud the owner’s judgement and result in them making decisions they wouldn’t otherwise make. With a franchise, the business' manager can be very clear about what they need to do to achieve success.
Enjoy a higher success rate
Compared to independent startups, franchises have a much higher success rate. This can be attributed to several factors;
- The amount of support franchisees receive from their franchisor.
- That franchises utilise proven business models.
- That franchises can rely on an established brand name and a certain amount of market exposure already.
Entering into a franchise agreement knowing that the franchise model produces businesses with a higher chance of success can be incredibly liberating. It prevents you from worrying about certain aspects of the company and allows you to relax into the role of the franchisee.
On the other hand, franchisees do need to be aware that this higher success rate can result in overconfidence that does not benefit the business in any way. Just because franchises are more likely to succeed, doesn’t mean all of them do. Those franchisees who go on to do great things with their business are those that understand that a franchise requires as much hard work, dedication, and commitment as any other business.
Benefit from a recognised brand name
While franchisees do benefit from the additional custom their brand name attracts, there are other advantages to this type of brand recognition, too. As a businessperson, other organisations are far more likely to want to constructively engage with you if you have the backing of an internationally known brand.
For smaller businesses and startups that don’t have this backing, networking, interacting, and working with other organisations can be more of a struggle. People perceive independent startups as more of a risk and react accordingly. Offers to collaborate, cut deals, and make mutually beneficial arrangements are greeted with far more scepticism than they are when made by someone with the backing of a major franchise.
Franchise branding isn’t just a matter of attracting more customers. It also opens numerous doors for those intelligent businesspeople who understand how to leverage it. The ability to fall back on a well-known brand name can grant you greater influence and authority when dealing with companies in your supply chain, it can prevent you from being walked over during conflicts with competitors, and it can present you with incredible business opportunities.
These are just some of the critical advantages of the franchising system over independent startups. However, franchising isn't for everyone, and you need to be sure that you're well suited to the role of franchisee before you make any rash decisions. Owning a franchise requires dedication and hard work, as well as essential business acumen, and isn't for everyone.
The Editorial Team, Point Franchise ©
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