EVERYTHING FRANCHISING

The advantages of buying a franchise

EVERYTHING FRANCHISING

The advantages of buying a franchise

Franchising is Less Expensive

The mistakes, trial and error, and development of systems will cost much more than the franchise fee, which is typically the only difference in cost.

Support from the Franchisor

One of the most important reasons to join a franchise is the ongoing support. Franchisors provide ongoing training for you and your employees; they provide coaches, mentors, franchisee groups and training materials to keep you educated and profitable.

Strong Brand

Having a strong, prominent brand creates trust with your customers. The basis of a strong brand is consistency. Customers want to know what to expect when buying from you, the brand helps create a level of comfort before they do business with you. The brand’s strength can be transferred into all new markets that the brand appears in.

Group Buying Discounts

Mom-and-Pop shops have a major disadvantage in this area. They are competing with a corporation that has 50 or more units buying the same products. Vendors of those products give larger groups bulk-pricing discounts, advantages on delivery and more products to offer.

Power of Being a Business Owner

Franchising gives you the freedom of the American Dream of business ownership, but protects your investment by limiting your risk.

Details of the Franchise Disclosure Document (FDD)

The Federal Trade Commission regulates franchising. The franchisor must provide full disclosure of their earnings, financial position, background of the executives, current and former franchisees with full contact information, a copy of the operation manual’s contents, a disclosure of all initial fees and all ongoing charges, a copy of the agreement, territory restrictions and more. This is extremely important as it allows you to know exactly how this franchise is doing. Are they stable? Are their franchisees successful?

Marketing Materials

The franchisor creates all branded and marketing materials to create a consistent message and take one more thing away from your workload as a franchisee.

Other Franchisees to Help You Grow

Having other franchisees in the system is an absolutely invaluable resource. This is a huge support group of individuals who are doing exactly what you are around the country. This group is always there and available to call on when you have questions. The franchisor is just one part of the total support system. The more qualified, talented people you have building your business, the faster you will grow.

Technology

Franchisors spend a great deal of time, energy and money on developing technology within their model to simplify the operations of the franchise. As a franchisee you benefit from these advancements every step of the way.

Research and Development

Franchisors allocate a portion of your franchise fee to research and development of new products, systems, marketing programs, competitive edge opportunities and public relations. These things allow your business to stay current while other businesses in the same industry struggle.

Proven System

Franchisors have developed a system that has not only been tested by them, but also by every single franchisee that has entered into their program. That means you have a tremendous advantage by opening a business with a proven and tested system. This reduces the learning curve, the breakeven point and the stress of opening a business.

Business Planning

Franchisors help you plan your growth and stick to that plan. It is extremely important to have objective and realistic ways of obtaining those goals by a certain date. This creates a sense of urgency, especially when you’re reporting the information back to the franchisor. That creates positive pressure to stay on target.

Higher Resale Value

We begin with the end in mind. When you start your business, set your goals and your exit strategy in advance. If you set a goal to sell your business in five years, your franchise will have grown in value by whatever your current annual income statement shows. This means for a $50,000 investment, if your annual gross revenue is $1,200,000 then you can earn 24 times the investment you put into the business. Franchises are also easier to resell than an independent start-up business. The reason is that franchisors are properly equipped with the sales team, marketing materials, support staff and success rate of their franchisees for the buyer to review. They provide a security and comfort level to the new business owner that a start-up simply cannot.

Equity in a Franchise

As your business pays off your equipment, cars, mortgages, and more, the franchise adds equitable value. Your employees alone create equity in the business, growing your net worth substantially.

Sales Systems

Franchisors often help franchisees with the actual sales process. If you have a large client but are not comfortable approaching them with an offer, use your franchisor. They will get on a conference call to help you close the deal. They will help you plan a strategy to secure the client and keep that client coming back. Franchisors are your advisors, mentors, sales team, back-end support and more. Use the resources you have at your disposal within your franchised system and you will be glad you did.

Ownership Transfer

Franchising gives you the option to transfer ownership rights if you pass away, or you can assign the franchise to someone else in the event that you become disabled.

In line with these thoughts, this table explains how a franchisee model compares to traditional business and the benefits that the franchising model offers you as a franchisee.

Criteria

Franchisee Option

Traditional Business

1. Opportunity & concept

The Concept already exists & is proven in the marketplace

One needs to do trial and error – should have or develop an expertise in each & everything

2. Systems & processes

Tried & tested systems and processes already in place and running

All systems needs to be newly created and processes designed

3. Support

Ongoing support would be available from the Company / Franchisor

Everything has to be managed and learned by yourself. No external support at roadblocks

4. Marketing materials and designs

All the marketing designs, collateral will be provided by the company. Tested already. Just have to use them

All materials need to be newly designed and tested until it works effectively. Also expensive as many versions need to be tried

5. Time required to start

Can start business operations immediately

Need a lot of time to initially set up with a lot of trials and coordinate for everything from materials to logistics to finance to recruitment and more

6. Risk

Risk is mitigated with proven & working systems in multiple locations already

Risk is higher as no part of the business has been time tested. Everything has to be newly tried on assumptions and beliefs

7. Regular updates, development upgrades & innovation

The Company would provide regular Updates and also focus on regular R & D and innovation for new upgrades

Everything needs to be handled by self. No other person or company would help with upgrades or updates

8. Business plans, projections, marketing guidance, training & more

Franchisee is provided complete hand-holding in all these by the Franchisor

One needs to completely devise their own plans and discover marketing approaches or get trained separately

9. Investment – need & clarity

Focused, planned & clearly aware of the initial and recurring investment as the same is already tried elsewhere

No clear idea. Appears less initially, but can be much higher as there are lots of trials to be made and new vendors to associate with less volume

10. Wisdom from others experience, feedback system, testimonials & evidence

Expert opinion and feedback shares along with testimonials from existing community of franchisees

No way to gather any feedback or wisdom from others nor expert opinion

11. Established brand recognition, ISO Processes, IP, trademarks etc

All franchisees can benefit from these processes, trademarks, IP and brand value provided by the franchisor

As it would be an independent new entity, brand recognition would take a few years along with confirmation of processes, trademarks, IP etc

12. Challenges, productivity & chances of success

Business & success systems and processes already being laid out, one focuses to improve potential & profits intrinsically and benefits from challenges solved by peer group. Existing and working model enhances chances of success

Unforeseen, unanticipated, new challenges at every step. Can get into a roller-coaster ride, hence affecting productivity and bottom-line. Statistics show, more than 90% of new businesses fail in the first couple of years

Awards & Recognition

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