Franchising is a unique business format. It is also very popular. It tends to attract people who want the freedom of running their own business, but are not comfortable with the risk, worry and, frankly, the loneliness of being ‘on your own’. Here we look at the top reasons to buy a franchise business:
1. It’s a tried and tested business model
The road to bankruptcy is paved with good ideas. It takes more than a ‘good idea’ to run a successful business. Your family and friends might pat you on the back for coming up with such a ‘good idea’ and having the bravery to start a business around it – but actually, it takes more than that to succeed in business. It requires a great business plan (which is something slightly different to a good idea) and a robust business model. That is what franchising offers – a proven business model that has succeeded in the past.
2. Less than 10% of franchises fail
Most new businesses fail within the first five years. Five years is the length of a standard franchise term. However, less than 10% of franchise businesses fail. Why? Because a franchise business follows a proven business model and has the support of a franchisor in the background. The attraction of franchising for many potential franchisees is that the risk associated with starting a new business is so reduced.
3. You don’t have to have experience in that industry
Not many franchisees have background experience in the industry that they choose to buy a franchise in. In fact, some franchisors actively avoid franchisees who have background experience in their particular industry. Why? Because, the franchisor will provide a training program for new franchisees in how to run the business according to the franchisor’s business model. The challenge for franchisees with relevant background experience is to let go of the way they have done things in the past and fall into line with the franchisor’s way of doing things. Franchisors do not want or need franchisees to reinvent the model. It works as it is! Franchisors want business owners who will simply run the business according to the training.
4. You get to ask other franchisees before you buy
This is an aspect of franchising that is unique and overlooked. As a potential franchisee you are able to talk to other franchisees who have set up and are running EXACTLY the same business that you will be running. You have the opportunity (through talking to them) to find out about the problems that you will be facing before they happen. They have literally been there and done it all before you. In franchising you will be running a clone business. There are big advantages to that!
5. You get to be your own boss
The lure of ‘working for yourself’ is powerful. Particularly if you are coming out of a career where you have always worked for someone else. Being on your own (with no safety net!) can be scary and lonely. Franchising is a sort of halfway-house. You can own your own business but have the weight of a national brand alongside you.
6. You can compete with high street brands
It is an endearing aspect of franchising that a small family run business can compete on a level playing field with the might of huge national brands. For example, each Specsavers franchise is a small business. With the power of the Specsavers brand behind it, the Specsavers franchisees (each a small business) are able to compete against Boots and other national brands of opticians (and appear to be doing rather well!).
7. You don’t have to source/invent your own products/services
One of the less well documented evils of running a business is maintaining products and constantly refining your services to keep them relevant. You may be a great salesman, but it will not be easy to sell if your products and services are not appealing enough to your potential clients. A franchise eases this headache. The franchisor has already developed successful products and services and will supply them to you on tap – so you are able to concentrate on selling.
Bonus Tip: You can sell it at the end
Just like building your own business, you get to sell a franchise at the end. There are two significant differences to bear in mind, however: Firstly, you don’t own the brand, the franchisor does – so there is a reduced goodwill value; Secondly, you can’t sell the business to whomever you like. You need to get the approval of the franchisor…
…but then franchising is much like a marriage, rather than an occasional one-night stand.