Think of franchising as a business relationship with training wheels. When you buy a franchise, you’re buying the right to operate a business using an existing firm’s brand name, systems, and tried-and-true methods. The company that owns the brand (the franchisor) gives you a license to use their name, logo, and business system for fees and your promise to follow their established procedures.
You need to understand that as a franchise owner (franchisee), you are not an employee – you are an independent business owner. However, you will need to operate within the franchisor’s guidelines in order to provide brand consistency and quality standards across all the outlets.
The Genuine Advantages of Franchise Ownership
You Receive a Proven Formula for Success
Starting a business from scratch means making countless decisions without knowing if they’re the right ones. With a franchise, much of the guesswork is eliminated. You’re buying into a system that has already been tested and refined, often across hundreds or thousands of locations.
This track record of success equals greater chances of success for you. No business is a sure thing, but franchises generally have a higher success rate than independent businesses. Franchise businesses usually outperform independent companies in profitability and survival, based on industry statistics.
Built-in Support When You Need It Most
Perhaps the greatest benefit to franchise ownership is the continuous support you’ll receive. Most franchisors offer:
- Extensive training programs to get you up to speed
- Marketing materials and advertisement campaigns
- Operational support and best practices
- Ongoing support when problems happen
This support can be a lifesaver, especially in your initial few years of operation. Instead of learning by trial and error, you have experienced professionals to turn to for advice.
The Freedom of Business Ownership (With Guardrails)
While you’ll need to follow the franchisor’s system and standards, you still enjoy the satisfaction of being your own boss. You’re the one who makes the day-to-day operational decisions, you manage your own employees, and you reap the benefits of your hard work and success directly.
This compromise between structure and autonomy attracts many people who want to be business owners but would rather have a roadmap to follow than venture into completely new terrain.
Growth Opportunity on Your Terms
Most franchise systems offer the ability to expand by opening additional locations once you have been successful with your initial location. This allows you to build your business empire at a pace that is comfortable for your situation and goals.
Some franchisees start with a single location and expand to multiple units, amassing considerable wealth along the way. Others will focus on building one highly managed location to its highest potential.
Is Franchising Right for You?
Before you take the leap, consider whether you’re prepared to work in another’s system. Successful franchisees are people who can operate within established procedures and still bring their own energy and business acumen to the operation.
You’ll need enough capital not just for the initial franchise fee, but for equipment, inventory, working capital, and your living expenses during the startup period.
Taking the Next Step
If franchising appeals to you, start by researching a number of franchise opportunities in fields that interest you. Attend franchise trade shows, discuss with current franchisees, and carefully read the Franchise Disclosure Document (FDD) franchisors are required to provide. Most importantly, speak with professionals – like an attorney who specializes in franchise law and an accountant who can decipher the financials.
The Bottom Line
Franchising is not suited to everybody, yet for many would-be entrepreneurs, it represents an appealing halfway house between employment and the risks of starting a completely independent business. With the right franchise opportunity and your commitment to working within the system, it could just be your key to the business ownership you’ve always dreamed of.
Keep in mind, however, that success in franchising – as in any business opportunity – still hinges on your commitment, work ethic, and determination to please your customers. The franchise system offers the formula, but your effort and dedication will dictate the outcome.