Starting a franchise is a lot like cloning a successful business and opening it in your own territory. The only real differences include the motivation and talent of the new owner (YOU) and the opportunity presented by the location in which you decide to open the business. Some of the most important advantages of owning a franchise include:
- Training – Nearly all franchise companies provide you with all the training you need to become successful. After all, they have a vested interest in you being able to run the franchise profitably and really want to see you succeed!
- Brand Awareness – It can take years for a business to successfully build a well recognized brand that helps drive sales and provides a competitive advantage over smaller competitors.
Brand awareness can make or break a business. Consumers buy things that they are familiar with and work with companies they know and trust.
- Purchasing Power – Most franchise companies have the opportunity to purchase all their goods, products, and supplies at reduced rates because they buy in bulk. Right away these savings can be passed back to each franchise unit and provide a competitive advantage in the marketplace.
- Proven Business Plan – Running a successful business is similar to learning a math formula and following its rules and laws time and time again.
Through years of experience franchise companies know what works and will teach you their formula for success.
- Advertising – In addition to an established brand, most franchise companies support their franchisees with both local and national advertising and promotions to help drive sales.
- Support – Successful franchise companies provide ongoing support for their franchises and franchisees. This usually includes ongoing training, system upgrades, product enhancements, as well as question and answer support systems using dedicated representatives within the organization.
Create a Checklist before you Consider Purchasing a Franchise Hire a lawyer and an accountant. Ask questions to understand all disclosures, franchise agreements, and other legal documents.
Do not leave this up to your lawyer, as it is very important for you to have an intimate knowledge of this information. Verify everything a franchise sales person says by asking for it in writing. Believe it or not, some sales people tend to exaggerate the truth from time to time. Analyze your market and make sure there is a need for your product. Contact both current and previous franchisees and ask them for both the positives and negatives associated with owning a franchise. Ask the franchise company for statistics relating to success rates. Make sure you are appropriately funded. A lack of capital could turn all of your early expenditures into a complete waste. Meet the key management figures of each franchise company. This is especially important for smaller franchise companies. Do everything you can to get to know both the company’s executives and their field representatives.