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Most people think that they can only dream of becoming their own boss, starting a small business, and the prospects of growing and expanding. The reality is that the only way to accumulate wealth and secure a financial future is to become a business owner. Once you decide to leap into business ownership, that is just the first step. Next, you have to consider what types of industries, business model types, and opportunities are available to you. 

You can choose a new business startup, or you can opt for buying a franchise. Both come with their advantages and disadvantages. The key is to minimize risk while maximizing the potential for success and profitability. So which one is right for you?

What is a Franchise?

Unlike small "mom-and-pop" startups, a franchise is a business method that helps to expand an existing business by providing goods and services through a licensing relationship. 

Franchisors grant a license to a third party to conduct business under their trademark and trade name, and typically, they also offer things like operating systems help, support, branding, and other perks that make it easy to get the business up and to go and to help sustain its success for those who buy-in.

Business Format - Franchising

In terms of relationships in franchising, there are two types: business format and traditional or product distribution. A business format franchising method is where the franchisor offers the franchisee their trade name, services, and products and usually has an entire system to help operate a successful business. 

The franchisor also offers things like site and real estate selection, operating manuals, brand standards, training, development support, marketing and business support, and quality control measures to help get the business up and running and make it sustainable and profitable for the future.

The franchisor hands over the "keys to the kingdom" of success. Currently, there are over 120 industries that use business format franchising to take their product or service to market, including automotive, education, logging, commercial and residential services, retail, food, senior care, medical services, restaurants, and real estate.

A traditional or product distribution format typically has higher sales than a business format. The focus on product distribution is not directly related to doing business but rather on the products supplied or manufactured to the franchisee via the franchisor. The products usually need pre-and post-sale service, as in the automotive industry.

Three Benefits of Buying a Franchise

When it comes to wealth accumulation, the only way to truly get ahead of the curve and stop spending your time helping someone else's fortune grow is by becoming a business owner. A new business startup is a risky proposition. When you consider that, on average, 20% of all new businesses don't make it to their second anniversary and that 45% of them won't make it to the five-year mark, opening a startup business can appear very challenging. Also, when you consider that about 65% of companies won't make it to ten years, the decision to be a business owner can be fraught with fear and trepidation.

 

Proven Systems/Business Models

The most successful franchise owners recognize that they may have to get their hands dirty and get to work until things pay off. If you understand that the fruits of your labor will take time to grow and ripen on the vine before being picked, you are m

Franchises differ, however, primarily because although they are technically a "new business," there is nothing new about them. A franchise is built on a proven business model that also comes with the perks of brand recognition and brand loyalty. Franchises have less risk compared to new business startups, which also means that the average person is more likely to be able to secure financial resources for a franchise as opposed to presenting a new business model to a lender or investor. 

There is also no required learning curve. When starting up a new business, you often have to be very well-versed in the industry and have the experience and expertise to guide the company while also working in it. Franchises do not require that you have any experience at all in the given industry you choose. You are handed all the knowledge you need before you even begin the process, which means that you can switch gears from your previous career and hit the ground running with a high likelihood of success.

For a new business startup, you can't wholly switch paths and start a new venture without becoming an expert. With a franchise, however, all the knowledge you need to run it successfully is given to you; all you have to do is follow the guide as outlined. You are almost guaranteed success without having any real hands-on training or education. It is an excellent way to find something you love to do without all the work of getting up to speed or attending extensive educational training.

In Business for Yourself, But Not by Yourself!

Often, when you begin a new business venture, you do so on your own, and it becomes an issue of making it or breaking it. A new business model, idea, or concept does not come with the guidance of those who have come before; it is a constant road of trial, error, and hard work. However, when you buy a franchise, you're buying the help and support of those who have already been there and done that. That means that you aren't reinventing the wheel; you are just picking up the playbook and putting it into motion. 

Real estate advice, construction plans, employee training, marketing, promotional tools, systems, and operations are already at your fingertips. That increases the probability that you will be successful; it reduces the risk that you won't. Buying a franchise also means that you can start making money from day one because you will be ready to go from when you say you're open. And people will be anticipating your new business because they already know who you are. They can depend on consistency and reliability. They recognize your product or service from the outset.

The Growth Scalability

Growth scalability is also a huge advantage of becoming a franchise owner. Multi-unit franchisees are a great way to continue building your wealth without restricting how much you can fit into one brick and mortar location or how many employees your location needs. When you own a franchise with high scalability, your potential for growth, expansion and profit margins are exponential and ever-widening. With a highly scalable franchise, the sky's the limit. 

With a scalable franchise, you also have very few expenses, including employee salaries, because most of the payroll is based on performance commission, which lowers your risk as a business owner. Unlike traditional business models where you have to pay people on a salaried or hourly basis, you only have to pay people who have already contributed directly to your profit margin with a scalable franchise. Being a business owner is further enhanced by knowing that you have less skin in the game, and you're increasing your potential for earnings with every new team member you take on.

How to Get Started Exploring Franchise Ownership - The Three Ds: Due Diligence, Deliberation, and Don't Go It Alone!

If you are ready to become a franchise owner and enjoy the benefits, the next step is to explore the available opportunities. If you head to the internet to see what is open, you will quickly be overwhelmed by the hundreds of thousands of choices. Although franchises have a higher likelihood of success than traditional startup businesses, that does not mean that they are all right for everyone or that everyone will be successful with every franchise. The Three Ds is the most crucial step to finding the right franchise for a satisfying and lucrative new venture.

Due Diligence

One of the best parts of buying a franchise is knowing what the future will probably look like. Franchises have to file a franchise disclosure document, which the Federal Trade Commission requires. This document is generated annually to explain in detail the terms for owning a specific franchise. It is critical to go through the FDD with a fine-toothed comb - or even better, to hire someone who understands the legalese and what it all means. 

You will want to pay close attention to things like startup costs and ongoing expenses and weigh them against the potential revenue that the business can generate. Also, consider how much support the franchisor will supply to you both initially and then as you grow. Things like employee training and operating systems help will be critical in getting things up and running quickly and working efficiently and effectively from the start. Finally, consider talking with both former and current franchise owners to get a feel for the daily operations and the real "boots on the ground" experience.

Deliberation

Next, think about other factors outside of the franchise itself. Consider personal factors like your personality style and what you would like to do versus what you don't want. You also have to take stock of how involved your family will be and how much support they are going to provide. 

Make a list of priorities, like what types of industries you think would provide personal satisfaction and improve your work/life balance. Ask the hard questions: do you want to work with customers and be the face of the company, or would you rather be behind the scenes? If you are going to buy a franchise, it will take a lot of your time and energy at the start to get it up and to run. How much time are you willing to sacrifice, and what can you live with and can't you if you have to?

Don't Go It Alone

One of the keys to being a successful business owner is learning how to delegate, whether in a traditional startup or a franchise. If you focus your energies on what you do best and let those who are well-versed handle the rest, you won't be spreading yourself too thin, making decisions without having all the information you need, or going outside your range of expertise. The first business decision you will face is finding the right franchise to buy, then taking all the proper steps to minimize risk and maximize wealth accumulation and work/life satisfaction. 

There is no need to dive headlong into figuring out the ins and outs of franchising opportunities, the legalities behind them, or sorting through the many steps you have to take and consider when there are franchise experts like Frannexus there to help. We have been through the process hundreds, if not thousands, of times and dealt with people from all walks of life who have different life circumstances, resources, and ideas about what their goals are going forward. The worst thing you can do is try to go it alone, especially when you don't have to!

Conclusion

When it comes to securing your financial future and building wealth, not just for the here and now but for generations to come, business ownership is truly one of the only ways to get ahead. Franchising is one of the least risky and most rewarding ways to find satisfaction in what you do while reaping all the benefits of freedom and security that come with being your boss. 

At Frannexus, we have all the tools and resources you need to make the most well-informed decision about which franchise has the highest likelihood for success and which one will be rewarding, scalable, and provide you with the rate of return you seek. The statistics are clear: a franchise has a higher likelihood of success than a traditional business startup. There is also a potential opportunity for anyone looking to secure their financial situation. Contact us today to get the process started, and let's find the perfect fit for your new and lucrative future!

Find out if franchise business ownership is for you.

Start the survey.

Currently, economic conditions are ripe for people to change paths and follow new pursuits. Over the past few years, we all learned that the status quo might not be what we all want to maintain. Many who were allowed to work remotely, gain more schedule flexibility, or enjoy more independence are unwilling to give it up and return to the old daily grind. 

That has many considering the prospect of becoming a small business owner. According to the latest statistics, small businesses currently dominate 99.9% of all companies operating in the US, and they employ over 47% of employees around the nation. Some major shifts will affect small business owners and their bottom line. When choosing which business will find the most success, there are many things to consider. 

 

Is Going-It-Alone Worth the Risk?

Although recent events certainly altered the face of small business survival, the latest figures do not veer very much from what they were in 2019. Currently, 67.6% of all new startup businesses have survived the two-year mark; when stretched out to five years, the percentage dropped to 48.9%, and only 33.5% of small companies celebrated their tenth anniversary. However, studies show that nearly 90% of all new franchises succeed. The statistics differ depending on the type of franchise and its industry. 

Launching a new business startup from the ground up is a much riskier proposition because it has never been done before. Unlike a franchise with a playbook for success, new small businesses come with a ton of trial and error - and often, more error than they can handle. The key to being successful as a small business owner is weighing factors such as personal strengths and weaknesses and external factors and economic conditions. For some, franchising is an excellent way to accumulate wealth, but only if they thoroughly investigate the many things that will make a business successful or lead to its downfall.

Who Should Invest in a Franchise vs. Go-It-Alone?

Most intuitively think that being a franchise owner is only for trailblazers looking to do something dynamic. Franchise ownership is something that people consider appropriate for type-A and classic entrepreneur-type individuals, and they are shocked to find out that it might be the opposite. In franchising, success is typically found in the slow and steady, more even-keeled type of personality that is not looking to buck the system or be super-innovative. Caution is not counterintuitive to franchise ownership success. These eight personality traits tend to go hand-in-hand with successful franchise ownership.

Personalities that are Results-Motivated

Running a successful franchise is not about working harder; it's more about working smarter. A franchise might be for you if you understand that acting does not necessarily mean meeting goals. Setting attainable and quantitative benchmark goals is the best road to successful franchise ownership. It requires someone who can continually pivot to find out what is working and what is not and then make the necessary alterations to get back on track.

 

The Big-Picture Type

The most successful franchise owners recognize that they may have to get their hands dirty and get to work until things pay off. If you understand that the fruits of your labor will take time to grow and ripen on the vine before being picked, you are more likely to find success.

The Motivational Speaker Type

You not only have a high sense of energy and enthusiasm; you recognize that it is your job to breathe that energy into those around you. You have a strong work ethic and expect it from those who work alongside you. People who can rally the troops are more likely to make big things happen.

The Optimistic Type

There is no half-empty in franchise ownership success. It takes a person who can find solutions and see opportunities where others see roadblocks. If you love a challenge, then franchise ownership might be for you. There is no room for wasting time rehashing what went wrong; you have to be able to put it behind you and move on!

The Likable Type

It is essential to know that you have fantastic communication skills as a business owner. Still, you have to take it one step further to see that customers and employees and their satisfaction are the keys to success. Business owners who seek to build relationships with those who work for them and those they work for will always enjoy more success.

The "Wear Your Seatbelt" Type

Becoming a business owner will always come with inherent risk, whether it is a startup or a franchise. Franchise owners who score lower on the scale of "risk-taker" and are more the "cautious" type tend to enjoy more success. Mitigating risk is critical to achieving the greatest amount of success. Taking chances is different than assuming risk, and knowing the difference has a huge impact.

The Perseverance in the Face of Adversity Type

For a successful franchise owner, failure is never an option. As an optimist, you don't just push through those things that keep others down; you take it to a whole new level of seeing opportunities and seizing them. No matter what gets thrown at you, the franchise owner who throws it right back and forges ahead with excitement will find the greatest amount of success.

The Calm, Cool, and Collected Type

Successful business owners don't lose their cool. One of the most critical personality traits for success is looking at a situation that might be incredibly anxiety-provoking and breaking it down calmly into something manageable. You can't operate in a state of panic, and in a crisis, the leader who will survive is the one who knows how to find the path out and force everyone into a single-file line.

Three Benefits of Investing in a Franchise Rather than Going It Alone

Going it alone versus opening a franchise both come with advantages and disadvantages. But franchises tend to enjoy three significant pros, whereas new startups have cons.

Switch Paths Without Expertise

In many cases, for a new business startup, the pathway to success rests in expertise and industry knowledge. For franchises, that isn't the case. Franchise owners rarely need to know much about the industry they're buying into. That means that there isn't a learning curve that you have to go through for success. You can start down an entirely new path by buying a franchise with no experience necessary. 

That is appealing to people who want to hit the ground running with a new business proposition outside of their wheelhouse, and it's a massive plus for those who are not enjoying satisfaction in their current careers. Often we get stuck in careers that we aren't thrilled with purely because switching gears would take too much time and energy. Those hurdles are eliminated when you buy into a franchise.

 

Assuming Lowered Risk

All business startups come with an inherent amount of risk, but a franchise's risks of failure are significantly lower than going it alone. Most lenders are reluctant to extend credit to new business owners precisely because of the risk involved. Franchises, however, do not have the same risks. When you buy into a franchise, you aren't starting from scratch, building a business model that may or may not work, and crossing your fingers. 

Franchises come with a playbook for success, and if you stick to the plan and execute it exactly as outlined, there is minimal risk involved. Your risk is even further reduced when you consider that branding, advertising, and marketing, which are the crux of a new business startup and what occupies the first several years to decades, are already done. You already have a customer base anticipating your goods or services when you open your doors!

 

Be the Boss

When you become a franchise owner, you are the master of your own fate. By choosing the right franchise, you enjoy more freedom and get to decide when and where you want to work. And you can enjoy a much more outstanding work/life balance; since support and training are generally supplied, all you have to do is follow the steps. Unlike a new business venture, you are in business for yourself, but that doesn't mean that you are going it alone. There are a ton of safety nets to take advantage of, which means that while you are the boss, it is challenging to fail if you follow the guide!

 

Tips for Exploring Franchise Opportunities

 

Now that you see all the advantages of franchise owners, here comes the hard part: figuring out which one to invest in. In 2020 alone, there were over 750,000 franchise opportunities to choose from - and counting! That is a staggering number to consider. While most people think the first best step is to hit the internet, looking within is the best place to begin.

 Check Yourself

Different franchises are going to speak differently to various personality styles. It is essential to take a good hard look inside and see what motivates you and makes you tick. Most people want to become business owners to enjoy increased work satisfaction, and that can't happen until you understand what you want and what makes you feel fulfilled and happy. Ask yourself questions such as:

• Do I like working with people?
• What kind of hours do I want to work?
• What type of franchise model works best for my needs?
• Do I want to work remotely or have a brick-and-mortar business?
• Will my family be supportive?

The more things you can challenge yourself about, the better outline you will have to find the opportunity that will be successful and suit your needs and help you find the work/life balance and satisfaction that you are currently missing.

 

Speak With Current and Former Owners

The best way to get a realistic picture of the 'boots on the ground' operation is to do two things: go to a franchise and observe the daily operations and speak to both current and former owners to get a gauge about what they liked and what they did not. Most owners will be happy to meet with you and share their experiences. By talking with them, you can quickly see whether the franchise is something that tends to excite them and what their overall take on it is.

Get the Help of a Professional Service

When it comes to deciding to become a franchise owner, why go it alone when you don't have to? Sifting through the vast sea of opportunities can be overwhelming and take time. At Frannexus, we have the industry knowledge to help you narrow your search efficiently to focus on the most challenging part: the fine details. 

We help with every part of franchise ownership, from deciding which will best suit your needs to finding financing. There is no denying that the process can be complex, but we take the guesswork out of it and help you make the best-informed decision with the most optimal chances for success!

 

The Takeaway

As we head into a recovery period, some things might begin to return to normal while others never will. One issue that many workers around the nation are struggling with is returning to the daily grind. Now that we have gotten a taste of freedom from the workplace, we're not rushing back to the status quo. 

If you want to be your boss, switch paths, do something different, and start accumulating wealth for yourself instead of someone else, then a franchise is an excellent solution! At Frannexus, our mission is to find the right franchise opportunity to suit your personality and goals and start you down the road to a more lucrative and financially secure future. Contact us today to get the process started!

Find out if franchise business ownership is for you.

Start the survey.

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