11 Reasons to Buy a Franchise in 2021
Business ownership is one of the fastest paths to financial freedom and eventually, to time freedom.
By starting a business, people dream of becoming their own boss and running things on their own terms. It all comes down to investing time and money in the form of capital and business expenses with a hope to multiply the investment.
Starting a business is easy but running a successful business is very hard.
One of the most important things in business is creating and following systems instead of relying on gut feeling when making decisions. Systematic approach, or lack of such, is one of the main reasons why some businesses prosper and others fail the first year.
That is where franchising comes into the picture as one of the options of business ownership.
According to International Franchise Association there are 733,000 franchise outlets in the United States.
We identified 11 reasons why a proven franchise system could be an option for a business owner.
Own Franchise With Proven Success Record
Successful franchise companies created systems and processes that consistently produce positive financial results. By law, franchise organizations are required to share their data every year in what is called a franchise disclosure document or FDD.
As a future franchise owner you are strongly encouraged to do your homework and review FDD offered by several franchise companies. Things like royalty fees and other franchise fees are listed in every FDD. We provide access to some franchise agreements on our Authority Franchise website.
Skip the Startup Stage and Avoid Risk
There is a lot of time and effort that goes into the startup stage of any business. Making mistakes at this stage could be crucial and result in business failure or leading to mediocre results. The risk level with starting a business from scratch is much higher than buying into an established franchise.
Paying due diligence when selecting a franchise is an important step that cannot be taken lightly. We recommend doing your homework, reading through financial reports, talking to current franchisees, asking questions, and looking at multiple franchise options available before making a decision to become a franchise owner.
Higher Likelihood of Success When Buying a Franchise
Taking on franchise opportunities and joining a successful franchise system does not guarantee success for you as a franchise owner. Chances for business success are higher when you are part of a proven system.
Franchise business models are ideal for people who are willing to follow the franchise system.
Brand Presence of Franchise Business
It takes months or sometimes years for startups to build what is called brand awareness. Building brand awareness takes time, skill, and money.
When you buy a franchise you are automatically plugged into relationships with a brand locally, nationwide, and sometimes even internationally. A franchise organization has history, brand value, and customer base built around multiple franchise locations.
Research shows that consumers are 60% more likely to buy from brands they recognize.
Learning from your own mistakes can be a costly approach when running a business. Being a part of a franchise organization will help you to eliminate common mistakes new businesses usually face.
Every successful franchise company has a training program in place to educate franchise owners before they even open a franchise. Training materials act as reference guides to help with any day-to-day operations such as hiring employees or running marketing campaigns.
As a franchise business owner you don’t necessarily need to have industry or business experience in order to operate your franchise profitably and efficiently.
Franchise corporate offices are helping franchise owners to run their business. That is why when speaking about franchising, people are told to go to business for themselves but not by themselves. Corporate support is the “life-line” you can always call when things are not running smoothly.
The success of a franchise organization depends on the success of its franchisees.
Most franchise companies charge franchise owners monthly marketing fees. Funds collected go to an Advertising Fund to support local and national marketing campaigns, including franchise advertising and PR activities.
Things like websites and social media are usually managed by corporate franchise people. Franchisors provide detailed reports about marketing expenses and results.
The grand opening of your franchise location is very important but not an easy task as it establishes the home base credibility from day one. The corporate office is responsible for assisting with marketing materials like uniforms, store decorations, brochures, etc.
Real Estate Assistance
Selecting a location for your business is one of the most important decisions franchise owners will make. Location, location, location.
Usually, as a franchise owner, you are responsible for selecting your site location. Most franchise organizations provide suggestions and support by providing written guidelines about site selection, layouts, and leasehold improvements.
It is in the interest of the franchisor to have the most desirable location for their brand in the area.
The sooner your franchise location is open, the sooner you as a franchise owner will start making money. Similar to home construction projects, the process can go smoothly or take forever, it can be on budget as planned or get out of hand.
Successful franchise organizations have a list of construction companies ready to assist with build outs. You can also get assistance with acquiring the right furniture and design services.
Purchasing Power of Franchise Business
Franchise companies have a list of approved vendors and suppliers for equipment, products, uniforms, printed materials. Prices are usually lower with bulk discounts comparing if you would buy as an independent business owner.
It takes time, effort, and money to find the right vendors, negotiate agreements, and build working relationships. For you as a franchise owner it should be a great financial benefit to take advantage of these relationships.
Getting Financing When Buying a Franchise
Getting a small business loan becomes easier with support from franchise organizations. They can help with reviewing a business plan and submitting an application. Banks are usually more open to financing the purchase of a franchise because of the existing record.
Usually small business administration loans require a 20% down payment and credit score of over 700. SBA reserves the portion of the loans assigned to franchise owners.
In this article, we provided just a few reasons to consider franchise ownership and how franchise organizations can help with major challenges that you can face as a business owner.
There are initial investment and ongoing fees associated with running a franchise. These fees are an investment that has to be made with any form of business ownership in order to be able to make money and avoid costly mistakes.
Franchising is not for everybody, it has its own pluses and minuses and as any investment should be carefully researched before making a commitment.
Every year new franchise owners take on franchise opportunities. We listed some opportunities on our Authority Franchise listing page.
There are great resources available on our Authority Franchise website to help you with making the right decision.