Franchising can be big business, so for the uninitiated here are a few good reasons why it might be an option for you, courtesy of Sara Wilson at AllBusiness.com:
You know exactly what you're buying before you buy
The potential franchisee can make an informed decision because a lot of information that can be obtained prior to purchase," says Barry Kleiman, a US business and self-employment coach.
In Australia, the ACCC requires franchisors to provide prospective franchisees with a disclosure document, which must contain the business experience of the franchisor, past/current criminal records and trade practices, commission, existing franchise outlet information, trademarks, franchise territory and any goods/services the franchise must provide or acquire.
It's easy to calculate ROI
Very few businesses or industries very clearly show you how much you can earn and when you might expect to earn it.
Established, successful franchisors can do this, which is a big benefit to first-time entrepreneurs. Entrepreneurs can also learn from other franchises and the reasons for their success, and stick to a business model and growth plan that has already been plotted out for them. Moreover, statistics show that franchises are five times more likely than non-franchise businesses to survive after 10 years.
You have easier access to financing
Typically, financing for a franchise is a lot easier than financing for a new, independent business. According to Commonwealth Bank, financial institutions may be more willing to lend to you if you're operating under an established name, rather than if you were a start-up with no proven track record. You may also receive financial assistance from the franchisor.
It gives you a head start
"A franchise provides an established product or service that already enjoys widespread brand name recognition," says Mr Kleiman. "This gives the franchisee the benefits of customer awareness which would ordinarily take years to establish."
Franchisors also usually provide the franchisee with training, management, advertising, operating procedures and assistance, and growth of the product/service and the franchise, according to the ACCC. This can also include pre-opening support such as site selection, fit-out and market knowledge.
You can save money and lower costs
A franchise system means it's easier to obtain discounts and benefits from vendors, which in turn benefits each franchisee individually. Entrepreneurs can also share a pool of resources at a lower cost since they are already established and maintained for everyone, such as call centres, software platforms, advertising funds and marketing campaigns.
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