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The Advantages of a Franchise

Guest post by: Dennis Schooley

Article Overview: I am fully confident in making the statement that there are many advantages to becoming a Franchisee in a good Franchise system. Of course, there are certain disadvantages as well, and each person must weigh their own dreams and desires in relation to what they want from their life. To many, the advantages will far outweigh the drawbacks. That’s why we have seen the domination of Franchising as a business strategy in the global marketplace over the past two decades.

The Advantages of a Franchise

I am fully confident in making the statement that there are many advantages to becoming a Franchisee in a good Franchise system. Of course, there are certain disadvantages as well, and each person must weigh their own dreams and desires in relation to what they want from their life. To many, the advantages will far outweigh the drawbacks. That's why we have seen the domination of Franchising as a business strategy in the global marketplace over the past two decades.

As the business strategy of Franchising evolves, it seems to become more and more attractive as time marches on. It's both more attractive to Franchisors, and more attractive to Franchisees. That's a reflection of the fact that Franchisors are simply getting better at it. The result is that Franchise systems are becoming more and more successful, and more Franchisees are fulfilling their dreams by joining good systems.

Reduced Risk of Failure

One of the significant benefits of becoming a Franchisee as opposed to starting your own business from scratch is the reduced risk of failure. The statistics are overwhelming when comparing the success rates of Franchisees versus stand-alone businesses. Depending on which study is being quoted, and which timeframe is being analyzed, the numbers are staggering in favor of Franchising. We see numbers like more than a 90% survival rate after five years for Franchisees versus in the range of 20% for stand-alone start-ups.

If we examine the reasons for the huge difference, it becomes apparent that there is great value in collaboration. First of all, a Franchisee has the Franchisor to rely upon for advice. The Franchisor will have faced the same issues as the Franchisee as they built the protocol business, and can pass along the wisdom that was earned through that process. That reason alone, means that the Franchisee doesn't have to guess at solutions to problems or opportunities in the business.

Not only does the Franchisee have the Franchisor to lean on for some sage advice based on actual experience, they can also call upon the other Franchisees in the system that are dealing with the same opportunities and issues. This concept is reinforced each and every year at our Schooley Mitchell Annual Franchisee Conference. The evaluation forms completed by our Franchisees reflect the same thing year after year. The sessions where they can trade ideas and discuss best practices with their fellow Franchisees are always rated the number one benefit of the entire Conference.

The opportunity to discuss issues and opportunities with people that are dealing with the same items in their daily business lives is a tremendous benefit of a good Franchise system. In fact, the best systems will facilitate this process with events such as an Annual Conference, regional Franchisee meetings, and by using current technologies such as teleconferencing and regular webinars. All of these practices add to the value that a good Franchise can deliver, as well as helping to mitigate the risk of failure. A stand-alone business must find external sources for such training and coaching sessions, and even then the programs will not include people that face the same day-to-day issues like a Franchise system.

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Article Tags: advantages, disadvantages, failure, franchise, franchisee, opportunity, system



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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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