One of the biggest misconceptions of the business world is the idea that you, for some reason, need to have a fresh and unique idea in order to succeed. This is, of course, not true; otherwise, there would be as many niches per industry as there are SMBs.
So, if you’re already going to use someone else’s concept, why not consider doing so under their corporate flag, as well? If, on top of this, you could also get the privilege of acting as independently as possible, what you would get is the idea of franchising.
With that in mind, here are the top five reasons why franchising is a good idea for aspiring entrepreneurs.
1. Brand Awareness
A well-known franchise already comes with a level of brand awareness that you would have to work hard to achieve on your own. Needless to say, this is the vital first step on your path to brand recognition and the creation of a loyal local customer base.
Moreover, by buying a franchise you already get a guaranteed territory of operations, which means that another franchise of the same brand won’t open in your vicinity. Sure, you’ll have other competition; yet, this alone is a massive reassurance that all things are going according to the plan.
2. Network Of Contacts
Another perk that you get from buying a franchise is an already existent and well-developed network of contacts. In fact, you may have the same supplier as the mother franchise, the same marketing coordinators and the same team of advisors.
If not, you can use the mother franchise as leverage when meeting new contacts, thus providing some additional leverage for your new business. In fact, just by getting in touch with the franchisor and having a simple line of communication with other franchises, your network of contacts will be substantially stronger than it would have been otherwise.
3. Professional Guidance
One of the main reasons why franchising is so appealing to the people who are just entering the business world is the fact that this business model doesn’t require nearly as much experience.
For instance, if you decided to look for a mechanic business for sale, you would also get a business plan and business system to stick to, ongoing support, training, advice and, of course, new ideas on how to improve their business model.
This alone can encourage even those who were unsure whether they’re cut out for the business world.
4. Lower Costs
On average, it costs substantially less to start a franchise than to launch a business of approximately the same size, type and capacities.
This may ensure a steadier and a more reliable start to your enterprise. Other than this, you’ll know the exact inventory and equipment you need in these early stages, which will help you immensely with budgeting.
Seeing as how you’ll follow the same or similar advertising patterns, you’ll get to avoid all those methods that don’t work. Lastly, seeing as how the franchisor has already registered a trademark, designed a logo and developed a website, these are expenses that you’ll be saved from.
5. Reduced Risk
In the end, starting a franchise is a lot less risky. You see, while about 50 percent of independent businesses won’t be active after five years, the same is true for only 10 percent of franchises.
As you can see, the odds are drastically shifted in favour of franchises. Sure, there is still the individual factor to consider, as well as things like the industry and the state of the local market. Yet, these would be present even if you’ve decided to run independent operation.
Of course, there are several downsides to franchising as well, ranging from being partially limited by the existing business model. Sharing profit with the franchisor and the franchisor’s right to refuse to renew an agreement at the end of the franchise term is one of them.
Most people, on the other hand, find that the benefits by far outweigh the disadvantages, which makes them eventually decide that going for a franchise is the right thing for them to do.