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Why you should consider franchising

Written by: Roy Seaman

Article Overview: If you dream of one day owning your own business but are discouraged by the idea as it seems too daunting and risky, franchising could be the answer you are looking for.

Why you should consider franchising

After years of sitting behind a desk in a nine to five job many workers feel stuck in a rut and dream of one day operating their own business. Frequently, however, this remains just a dream, as the prospect of striking out alone can seem too daunting and risky. For those who want the independence of being self-employed, yet still want the backup and support of an established business behind them, franchising could be the ideal option.

One of the main reasons that many people are drawn to franchising is that statistics consistently show that it is less risky than independent start-ups. This is because a franchise owner uses a tried and tested model of an already successful business. Many companies will have been trading for some years before they look into expanding their businesses through franchising, and when they do decide to take this route most will invest a great deal of time and money into developing an effective franchise package that will enable franchise owners to run their business as successfully as the franchisor.

As part of a franchise package it is common for the franchisor to provide franchise owners with thorough training and ongoing support. This is of great benefit to those who have no experience in running their own business, because the training usually not only covers the products and services they will offer customers, but also the ins and outs of being self-employed from correct bookkeeping to hiring employees. Additionally, the majority of franchisors provide constant support that can include everything from technical help to assistance with marketing.

Furthermore, as the franchise grows a network of franchisees is created, which allows franchise owners to exchange information and advice between themselves and creates additional support. Some franchises now have internet sites that are specifically for franchise owners and feature franchisee forums that enable them to communicate with one another easily. Other franchisors hold conventions that allow franchise owners to meet and talk face to face.

Franchising is a unique option for those wanting to become self-employed as it offers them the chance to open a business that carries a well-known brand name. This can really benefit a franchise owner in their first few months of trading because instead of investing time and money into getting their brand into the marketplace customers will already be familiar with their products and services. As well as this some franchisors have large marketing departments that concentrate on creating nationwide advertising campaigns to strengthen the brand image.

Some entrepreneurs are put off the idea of franchising as they feel they cannot afford the initial capital needed to launch a franchise business. Although the start-up costs of a franchise can be more expensive than an independent business it is, in fact, often easier to raise the capital for a franchise. This is because most banks look more favourably on lending loans to those wanting to start a franchise business than those looking to go it alone, mainly due to the fact that banks see franchising as a far less risky option. During an economic downturn this can be of even more importance, as banks are more cautious about where they lend money.

Despite the fact that owning a franchise business is less risky and has the backup and support of an experienced and successful franchisor, to be a successful franchise owner you cannot sit back and expect your business to run itself. Whatever type of business you are looking to own they all have one thing in common – they take hard work, dedication and commitment to make them successful.

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Article Tags: bookkeeping, conventions, desk, franchise owner, franchise owners, franchise package, franchisee, franchisees, franchises, franchisor, ins and outs, internet sites, ongoing support, option one, own business, start ups, successful business, technical help, time and money, ups



Related Forum Posts
Any franchising horror story? - I am always writing about the benefits of franchising in this forum. Although I don't own a franchise I do believe in franchising is a great business model. Do any of you have horror stories to share about franchising?
Re: STARBUCK - Licensing vs Joint venture - [quote="bmueller47":czemqiul]I often come here to learn something, therefore I would like to know what is the real practical difference between licensing and franchising. I might have an answer, but you are at the forefront with your knowledge.[/quote:czemqiul] Very good question. Although I am not an attorney, I will do my best to highlight what I believe are the main differences between franchising and licensing. First, here in the US, franchising is very regulated buy the Federal Trade Commission. Not anyone can franchise, you have to go through various steps. Licensing doesn't come with as much regulation. The franchisee can expect to have a very close relationship with his franchisor. In most cases, the franchisor will offer training, and on-going support. The franchisee will be able to use the franchisor's copyrights, trademarks, logo and so on. The franchisee is like the public face of the franchisor. This is I think the high value of franchising. Also, a franchise agreement will most likely define territories. The relationship between the licensee and the licensing company is much looser. In most cases, the licensee won't be able to retain the rights to trademarks, company name, etc and will have to establish his own identity in the marketplace. Licensees rarely get a protected territory which means you next door neighbor could be your competitor... Obviously, franchising is more expensive than licensing because you get a certain "safety". Again, franchising is highly regulated whereas licensing is not. There are many other differences between franchising and licensing but I think these are the main ones.
Franchising is not a "no-cost" expansion model - Don's point above was right, and, if he only lost $5,000 getting into franchising, he got off very cheap. Getting into franchising is a serious business. We estimate that you need [u:32pu99ec]at least [/u:32pu99ec] $50,000 to do it right -- and it can cost five times that much for an aggressive expansion plan. Jim was right on. If you choose to franchise, you are getting into a new business -- the business of selling and servicing franchises. Mark
Re: Welcome New Moderators in Addition to Our Fine Team! - Hi Folks, My specialty is franchising. I have sold franchises for a living for quite some time. (I even sold one to a relative!!) I currently own a franchise consulting company. We match people up with the franchise that fits the business model they are looking for. Hope to contribute to the forums here. If anyone has questions about franchising let me know. I like helping others. Talk soon, John .
Is The E-Myth The Ultimate Franchise Guide? - Ever since the E-Myth made its way through to becoming one of the most popular books for entrepreneurs, the number of small business owners who have come to me discussing franchising has exploded. Is the E-Myth the reason why so many companies are now looking at franchising their business model? Are there any other resources you can suggest for new franchise owners or people considering it as an option?


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