5 Reasons to Own a Franchise
Here’s how the International Franchise Association sums up the advantages to buying a franchise: “Owning a franchise allows you to go into business for yourself, but not by yourself.”
Here are five reasons to buy a franchise instead of starting a business from scratch:
1. You don’t have to invent a new product, service or business. Not everyone is an Eric Major, the cofounder of Loudoun-based K2M, or a Sheila Johnson, the president and CEO of Loudoun’s Salamander Resort. They invented new businesses and had to build them by trial-and-error. The beauty of buying a franchise is that it’s already a proven business that works.
2. You have built-in branding. It can take years to build a brand for your business. A franchise already has years of advertising behind it, and in many cases, a built-in customer base. McDonald’s is a classic example.
3. There’s less risk. According to Bloomberg, eight out of 10 businesses started by entrepreneurs fail within 18 months. Compare that to a statement from the International Franchise Association Educational Foundation which put the franchise success rate at 90 percent over the seven-to-10-year span of the average franchise agreement.
4. You can save money. Franchisees have the advantage of buying supplies and equipment in bulk. You also save by participating in the franchise’s national or regional advertising efforts. Of course, there’s also a franchising fee, so make sure you do your own financials before signing up.
5. You have ongoing support. The franchise owner will train you in how to run the business. Sometimes the training and consulting services are offered throughout the life of your franchise agreement. The owners are motivated to help you because it’s to their advantage for you to succeed.
Although franchises have higher success rates than startups, some do fail. When thinking of starting a franchise, be careful and do your homework. You may find lower cost business models work better than higher cost ones in some areas. Also, franchises don’t allow for much innovation. Make sure you’re happy with the model as it is, without changes.
Be sure to calculate the time and money it will take for your franchise to replace the salary you had while working for an employer. And understand the type of franchise that best fits your talents and interests.
A franchise consultant can help you figure these things out before you make any commitments. Some will work with you at no charge because their funding comes from franchise owners.
Content contributed by Lois Kirkpatrick of Loudoun SourceLink, a proud affiliate of U.S. SourceLink, America’s largest resource network for entrepreneurs.