a. A franchise business offers you the benefits of using a proven business formula in your own, local area.
In a franchise, your up-front franchise fees to the Franchisor (owner of the concept) are used by the owner to re-coup some of their investment in refining the formula, registering the concept as a franchise with Federal and State regulators and other up-front development costs that helped bring the opportunity to your attention in the first place.
Can you imagine that this opportunity would not be available to you without the Franchisor’s efforts over years!
b. A franchise allows you to start your own business without any prior knowledge of that industry.
Most franchises on offer do not require for you to have any prior knowledge of the industry that you are investing in. They will provide all the training necessary to get started, assist with National and Local Marketing, Equipment purchases, Site Location expertise, Technology, Staffing, Supply chains etc.
All you must do is be willing, and able to work hard and manage your local business in a professional manner.
c. Franchisor Training & Support.
Unlike starting your own business or buying into an existing one, a franchise business offers you training and on-going support at every step of the way. As a part of your up-front franchise fee, the Franchisor will provide both off-site and on-site training in all aspects of the business. It normally starts with a one-to-two-week initial training course at their corporate headquarters. This is then followed up with additional support training as required by Zoom or phone. Many Franchisors also provide on-site training at regular intervals.
With a franchise, “you are truly in business for yourself, but not by yourself”!
d. Support through other fellow local franchisees.
Just ask yourself, if you either start your own business or buy an existing one and things are not going to plan, who can you reach out to for advice and support?
The answer is, probably no one!
However, with a franchise business, not only can you reach out to your Franchisor but normally, your local fellow franchisees can be a great source for advice. After all, you are not in direct competition as you all have protected geographical or population territories and, one of them would have come across the issue/s that you are facing. Many Franchisors also encourage establishing a ‘Franchise Advisory Board’ that allows both the Franchisor and selected franchisees to meet to discuss common points of discussion.
e. When investing in a franchise, how can I be sure that my investment is safe?
If you ask any businessman in the world whether there is a guarantee of success in any business venture, the answer, from the wealthiest to the less well-off will be, “there is no such thing as a guarantee”!
Off course, there are very many things that you can do to make sure that your franchise venture is as much of a success as possible. The following are some of the things you should be doing in your investigation stages:
- Ensure that you are suited to being in business as all ventures have their ‘ups and down’s’.
- Are you capable of managing a business and any staff members?
- You need to be a good ‘people’s person’ as every interaction with staff, vendors or clients depends on this.
- Are you able to put in the tough work hours necessary, especially when starting, into the business?
- Is your family fully supportive of your new venture? It will take many family sacrifices to succeed.
- Do you fully understand the franchise model and where, and why, it has been successful for others?
- Is your locality very similar to where the concept has already been successful?
- Draw up a negatives and positives chart to better understand if this will work for you.
- What is your competition, and can your concept compete favorably against that?
- Like most new businesses, you will need some back-up ‘working capital’ of say, 6-12 months
- Have you, the franchisor or your CPA put together a 3-year Profit & Loss projection + a 12-month Cashflow?
- Anything else that you can think of.