5 Reasons Why Franchising Is so Attractive for Many Entrepreneurs
As an entrepreneur, you probably have a number of ideas about how to start your own business. Maybe you’ve thought about opening a coffee shop or food truck, or maybe you’ve considered other fields like healthcare or technology. When it comes to choosing the right business structure, franchising may not be the first on your list.
However, this business model has been growing quickly in recent years, and we see more and more entrepreneurs choosing the franchise path as their way forward. Why exactly? There are many reasons why franchising is so attractive for many entrepreneurs. Read on to find out more!
1. Franchising Is a Tried and True Business Model
At its core, franchising is the business model of licensing a proven business model to other people. You license your know-how and business model to others, and they pay you royalties or fees in return. And while the business model has existed in some form or another for hundreds of years, franchising as we know it today really took off after World War II.
In fact, it is one of the oldest business models in the world. It is appealing to entrepreneurs because it has been tried and tested over many decades, and it has a proven track record of success. Franchising is highly regulated, so it’s been proven that it works. It’s more likely that a franchise, whether it’s an industrial franchise or similar to that kind, will succeed—and will survive in the long run—than a new business idea.
Also, it allows you to enter a proven business model that has been tested and refined over decades. Nevertheless, it is an excellent way to get into business with less risk because you will have to work with the franchise company to hone the business model and open new locations.
2. You Don’t Have to Come up With Everything Alone
One of the most important parts of any franchise business is the brand. When you start a business from scratch, you have to do a lot of the heavy lifting yourself. You have to come up with the company name, logo, business model, and product or service offering. All of this has to be done from scratch, and it is incredibly difficult to do well—especially if you’re not a trained designer.
With a franchise, you will be working with the brand team of the parent company. This team is responsible for the brand and will work with you to make sure your franchise location is true to the brand. Whether you’re in the food sector or the auto repair industry, your franchisor will give you everything you need to succeed. You’ll be able to start marketing your franchise location immediately because the company will have a huge marketing budget.
If you’re concerned about not having the right people on your team, franchising can also help you hire and train the right people because you will have access to the parent company’s hiring and training systems. You don’t have to be an expert in everything. A franchise will take care of the important parts of running a business.
3. Branding and Marketing Help You Succeed
You’ve probably heard that 80% of new entrepreneurs fail within the first 18 months. Franchising is one way that you can reduce your risk of failure by jumping into an existing model that has been proven to succeed. But even if you do everything right in it, you’ll still need to capture customers’ attention and get them to visit your business.
Without a marketing campaign, even the best franchises can fail. Franchising gives you access to the marketing campaigns and efforts of the parent company. Most of the big brands that you recognize are franchised, and the company will have already tested and tweaked its marketing efforts. When you buy into a franchise, you’ll be able to use the same marketing that the successful parent companies use.
This means that your business will get the same attention as a huge multinational corporation. Marketing will bring customers to you, and branding will help you stand out from the crowd.
4. It Gives You the Chance to Build Equity Quickly
One of the biggest advantages of owning a franchise is that you’ll be able to build equity quickly. It is a very capital-intensive business, but it gives you the chance to get a lot of returns on your initial investment quickly.
Once your franchise location is up and running, you will receive royalties based on your location’s sales. You will get a percentage of the net sales at your location. It gives you the option to enter into a joint venture with an existing franchisee. This lets you share the risk and rewards of running a franchise location.
You’ll be able to get in on the ground floor of a successful business, and you’ll get a share of the revenue and profits from day one. This is a great way to get involved in franchising with less risk because you’ll be entering with an established franchisee. In return, you’ll have a lower initial investment since you’ll only need to put down a small amount of money.
5. It Offers Guidance and Support
Another huge advantage of franchising is that it will give you access to the support and expertise of the parent company. Many companies have 24-hour support lines, and they have experts on staff who can help you with any challenges you’re facing. You’ll have access to the expertise of people who have helped run many successful franchises.
You’ll be able to learn from their experience and use their support when you need it. Many franchisors also have forums or online groups where franchisees can communicate and share advice. You’ll be able to get help from people who have been in your shoes and who can offer advice based on experience.
6. The Cost of Entry Is Lower Than Starting From Scratch
Finally, one of the biggest reasons that franchising has become so popular in the last few years is that the cost of entry is lower than ever before. It has become more accessible to entrepreneurs of all races, religions, and creeds, and the cost of entry into a franchise has decreased as a result. Many franchisors have worked hard to make their franchises more affordable so that more people can get involved.
The cost of starting a franchise today is about $150,000 on average. The cost of starting a new business from scratch can vary depending on the industry you’re in, but it averages around $35,000. The cost of a franchise has gone up in recent years as it has become more popular, but the cost of entry is still lower than starting a new business from scratch.
There are many reasons why franchising is so attractive for many entrepreneurs. It allows you to jump into an existing model that has been proven to succeed. You will have access to the marketing campaigns and efforts of the parent company. The cost of entry is lower than starting a business from scratch. Nevertheless, as you start to explore this space, make sure to do your homework first about it and set your long-term goal along the way.[Image Source: Freepik]