As of 2019, there were 773,603 franchise owners in the United States, and these businesses generated total revenue of $787.5 billion.
This kind of entrepreneurship has such a wide reach because it can be highly profitable to the overall company and the individual franchise owner—without some of the risks associated with creating an entirely new business.
If you have entrepreneurial ambitions, but aren’t sure if franchise ownership is for you, here are five benefits to consider:
1. You start with an established business model
To build the framework of a company from scratch, you need to think in terms of the large-scale vision and fine-point details. When investing in a franchise business, many of those details are determined for you. Not only are you able to work from a proven business model, but technologies and processes have already been set into motion.
All of this saves you time and money. As experts at Entrepreneur explain:
"You'll gain from the economics of scale in buying materials, supplies, and services, such as advertising, as well as in negotiating for locations and lease terms. By comparison, independent operators have to negotiate on their own, usually getting less favorable terms. Some suppliers won't deal with new businesses or will reject your business because your account isn't big enough."
2. You have flexibility and security
If the motivation for owning a business is the freedom to manage your schedule and lead your own team, but you’re not in the position for too much financial risk, a franchise can help you strike this balance.
"Being a franchise owner provides an opportunity to work for yourself with the support and guidance of the parent company," says Laura Williams, the Assistant Vice President and Director of Franchising at SERVPRO.
This is even more powerful if you buy into a business that’s essential to daily life.
"A benefit of our own franchise is that we are recession-proof. No matter what the economy might be, our services always fill a need."
When looking at your franchise opportunity, the financial and economic stability of the business itself is a key element to consider.
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3. You can be trained in operational logistics
When you’re at the helm, all areas of management are on your shoulders. You have to consider hiring and onboarding the staff, collaborating with the vendors and supply chain, monitoring the cash flow, accounting the expenses and payroll, and overseeing the systems and processes.
With a start-up, you either learn these functions on your own or outsource them to a contractor.
As a franchise owner, you’re trained by the franchisor in a uniform mode of operation. Here are the training approaches you may have access to, according to Mark Seibert, author of Franchise Your Business.
- Pre-training: written manual or online course material to read
- Classroom training: curriculum taught at the franchisor’s home office
- Onsite training: hands-on assistance at the franchise location
- Ongoing training: video conferences, regional meetups or conventions
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4. You benefit from existing brand awareness
Based on data from Neilsen’s Global New Product Innovation Survey, 59% of consumers would rather purchase from a brand they’re familiar with than a business that’s new. This is why brand recognition is so vital, but it can take months or years to establish as a new business.
You need to develop consistent brand visuals, produce content that draws your audience, grow a platform on social media, communicate excellence and quality through customer service, and launch a standout marketing plan. When buying into a franchise, however, this legwork is done for you because, in most cases, your audience knows the brand name and trusts its credibility.
5. You can scale and grow with greater success
When you start a business, a long-term ambition is often to expand at some point, but this can be easier said than achieved. According to Fortunly:
- 20% of small businesses close in their first year of operation
- 50% don’t last more than five years
- 82% of start-ups fail due to not enough cash flow
- 42% fail due to not enough customers
When you lack the resources and backing, it’s hard to sustain a business—not to mention, scale it to the next level. But with a franchise that has earned the support of a strong customer base and a business model that’s been proven to work, you have the tools to grow.
Conclusion
Buying into a franchise, rather than starting your own business, comes with many benefits. Not only do you have the luxury of starting with a business that already has a successful business model, but you can leverage current branding and built-in processes that allow you to hit the ground running.
