How does buying a franchise compare to starting your own business from scratch? In short, it can be easier, but it also comes with less control over your destiny and the location of your future business. The benefits of buying a franchise are detailed below, so you can decide whether this business model is right for you or not.
What is a franchise?
Before you even think about buying a franchise, it’s important to know what franchising is and how it works. Franchising is basically a type of licensing agreement between two parties: one that creates and sells products or services (the franchisor) and another that wants to sell them (the franchisee). The franchisor provides goods, systems, methods, and materials—and sometimes financing as well—to allow its franchisees to create replicas of its business model. In exchange for following certain operational procedures and paying fees, franchises are given protected territories with all equipment, supplies, advertising materials, technology, training material and more included in their purchase price. Here are some other things you should know before deciding whether or not buying a franchise could be right for you.
Why Buy a Franchise?
When you buy a franchise, you get all of your money upfront and are usually protected by a comprehensive operations manual. The owner of a franchise is also able to develop long-term relationships with vendors which can be particularly beneficial when purchasing in bulk. For example, during my time as an owner I was able to create deeper relationships with my suppliers allowing me to purchase my produce at a much lower cost than other competitors. This saved me time and money which helped keep prices down for my customers. Furthermore, each year there are thousands of franchises that open up for sale giving entrepreneurs an opportunity to expand their businesses quickly and easily. While it may seem like buying a franchise comes with numerous disadvantages, many business owners believe that these benefits outweigh any downside.
How To Choose A Franchise
When it comes to choosing a franchise, your first step should be picking out which franchises have made it through the rigorous screening process to become franchisees. Ideally, you’ll be able to check out a company’s FDD (franchise disclosure document), which is usually available on their website and tells you all about how many locations there are in different cities. You’ll also want to look at some sales numbers for recent stores that opened; if more than one franchisee is successful in selling a store after opening, that's an especially good sign that it will be successful for you too. To choose a franchise worth buying into, make sure that these are reputable companies with proven track records of success.
Buying a franchise is an attractive option for many entrepreneurs because it takes away some of those pesky details about what your business should sell, how to market it, and how to price things. The most important question you'll have to answer when buying a franchise is what kind of territory do you want? For example, if you buy into an established pizza chain territory (as opposed to creating your own new store), there will be more competition in your area. But you’ll also have an established customer base waiting for you when you open up shop. If you’re interested in buying a franchise, make sure that these three signs are present before going forward with any deal.
With a franchise, you won’t be beholden to a business plan or high-risk startup costs. Instead, your initial investment is fixed and predictable. And with a pre-established brand, marketing plan and other systems in place, you can concentrate on growing your business instead of spending time and money trying to build it from scratch. At least that’s how it works in theory.
Franchise Vs. Independent Businesses
Owning a franchise is one of many possible approaches to starting a business, but it’s not necessarily better than other ways. If you go into it armed with information about potential benefits and pitfalls, you can make an informed decision about whether a franchise makes sense for your goals. Start by learning more about franchising versus independent businesses .
What are the different types of franchises?
If you’re just starting out, you may not have much cash to spare and a franchise might seem like an unattainable dream. Fortunately, franchises have grown in popularity over recent years, with many new companies choosing to go down that route; more of them are being created each year. Because of this, franchises now provide more options than ever before: From care franchises to b2b franchises and everything in between, you should be able to find something suitable for your personality and goals.
Location, Location, Location!
Choosing where to open your business is one of the biggest decisions you’ll have to make when it comes to starting a franchise. There are many factors to consider when choosing a location, but some common criteria include foot traffic and access to public transportation. Before investing in a storefront location, be sure you know exactly what type of clientele you’re targeting.
The stability of working for a franchise can make it easier to obtain full-time employment. While that’s not a major benefit if you already have a full-time job, it can be helpful in starting your business—especially if you’re planning on running it part time while still holding down another position. If you need help building your career, then working for a franchise can lead to more opportunities within their company.
Financial Considerations and Expectations
If you are on a budget, browse low-cost franchises! Low-cost franchises usually have lower start-up costs and are often still lucrative business opportunities. These kinds of franchises can be great for businesses just starting out, but they’re also a good way to put your own personal stamp on a popular business model that may not fit into your budget as much.
How do I get started?
The first step in opening a franchise is choosing which business you’d like to run. Think about what type of industry appeals to you and how much time you’re willing to invest in your new venture. Next, develop a list of franchisors that match your criteria and learn as much as possible about each one before moving forward. The third step is deciding on a business structure. A good way to start is by researching similar franchises and asking yourself whether they would appeal to others with different backgrounds, skills or interests. Finally, it’s time for action: Decide which franchises interest you most and contact them via phone or email.