By Wayne Mates
Last week, I wrote about considering a franchise and deciding to forgo buying one. I started a similar business without the support of a franchise operation. It was a decision I made after researching the pros and cons of a franchise and what advantages a franchise would give me. For many people buying a franchise is the better decision.
If you are looking to go into business for yourself, you can buy a franchise for almost any type of business. Hotels, restaurants, dollar stores, business services and fitness centers all offer the chance to buy into a tried and proven business opportunity. You can buy an existing franchise from either the current owner or direct from the franchisor.
What are the advantages of going with a franchise? Let’s take a look at some of the reasons a franchise may make sense for you.
- Established Business Plan – When you buy a franchise, you are buying an established proven business idea. The franchisor has a proven method of operation and proven products or services.
- Minimize Risk – You want to make a profit and maintain a business that will grow and expand. Far fewer franchises fail in business than other business startups. Studies have shown that 90% of franchises are in business after 5 years as opposed to a 90% failure rate of non-franchised businesses.
- Name Recognition – A big reason to purchase a franchise. When you open for business, you expect marketing support from the franchisor. Many people in your market area will recognize your business because they have been exposed to the business name or products. A new startup lacks that recognition.
- Support – Most franchise operations have an owners association. You have an opportunity to ask questions of experienced franchisees if you run into issues that the parent company cannot resolve. Chances are good that any issue you confront has been solved by either the parent company or another franchisee. You do not have this support network in your own business.
- Financing – Many franchisors have relationships with banks or other lenders to finance a portion of the franchise fee and working capital. As long as you have good credit, some assets and have taken the company’s business plan and modified it to your circumstances, you may be able to qualify for funding. A non-franchised startup can have difficulty establishing funding to operate.
If you do not experience founding a new business, a franchise can save missteps in your startup. If you have the desire to be in business for yourself, but not by yourself, consider a franchise.
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