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Advantages of Investing in a Franchise

Guest post by: Nick Strong

Article Overview: Many are currently looking at franchise businesses and weighing up the pros and cons. In this article we consider the advantages of taking on a franchise business over conventional self-employment.

Advantages of Investing in a Franchise

Pretty much any service that springs to mind can often be franchised and numerous already trade as a franchise business. Browsing through the many online franchise websites will soon give you a measure of the amount of franchise systems accessible to almost anyone with some resources to invest, a readiness to gain knowledge, a dedication to be devoted to the system and work hard.

With that in mind what are some of the advantages to choosing a franchise opportunity over conventional self-employment? On the outside it might look like you are in fact paying out capital to another company to merely work under their banner only, but there are various significant differences which can make a franchise system a good alternative.



A tried and tested business system

The focal point of a franchise opportunity is its established system. A franchisor more often than not started initially as a traditional operation who, since proving the business is profitable, will often seek out further ways to expand their already thriving business. The essence of the franchise idea is, very simply, the replication of a confirmed business model. This provides a significant advantage of self-employment in that the franchisor has previously tried and tested the business and documented it so that it can followed by another giving them the ability to replicate their success.

Branding and Customer Perception

Clearly there are the high profile, familiar, food chain franchise businesses which by the weight of their branding and promotion signify considerable advantages over setting up your own newly named business. But even with minor, lesser identified franchise brands, the buyer perception that it is a component of a much bigger group can in itself cause safety and confidence to the consumer that the franchise opportunity is not merely a here today, gone tomorrow outfit but there is a bigger group behind it.

Funding

A lot of banks look positively on franchise startups because of their proven history. This can be notably true for fully established franchise businesses since the franchise sections of the key banks typically retain records on what franchise opportunities seem to be performing well. This can be a plus over traditional self-employed startups that can often be more of a challenge to aquire financing and support from the bank.

Support

A decent franchise owner will provide support and instruction to ensure the best chance of success. At the end of the day, the business is owned by the franchisee and he or she is liable for its failure or achievement. Yet, if times are tough or inspiration is low it should mean there is an ear to chat to for guidance and assistance.

These are only a select few of the main benefits in choosing a franchise business over going it on your own. Nevertheless, investing in a franchise is like investing in any other business venture. Taking on any investment requires wise research to make certain of well educated decisions and not throwing caution to the wind for the reason that a business opportunity has a ‘franchise’ label. Consider with care, do your research, talk to established franchisees and don't rush.

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Article Tags: franchise, franchise business, franchise businesses, franchise opportunities, pros and cons



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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