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Ask The Franchise Advisor: Benefits of a Franchise

Laura from New Jersey asks: “I know buying a franchise business is a good idea because they train and support you, and they have a proven model, but I am trying to convince my business partner who does not see these benefits as enough reason not to go it on our own. Any thoughts?”

Laura, you are right, a franchise offers you a proven system, tried & true best practices and initial plus ongoing training. Beyond that, there are quite a number of advantages that a franchise system offers. Here are a few of my favorites. Good luck!

1. Group Purchasing Power – A franchise business owner often saves money on supplies because the prices are negotiated by the franchisor. Because of the size and repeat orders, the system benefits from discounts not available to single stores. This gives the franchises a big advantage over their competitors because they can be more price competitive.

2. Less Expensive “All In” Costs – It’s possible that less capital is needed in a franchised business vs. an independent start-up. This is because the experience and proprietary systems of the franchisor often curtail the expenses of trial and error…let alone the 2-5 years necessary to develop best practices and those opportunity costs.

3. Continuous Research and Development – We know that markets can change rapidly and local businesses have to keep up. Often, the chance to seize the opportunity of leading in the market is available for only a very short while. This competition creates a need for relevant and targeted product monitoring and innovation to keep and build marketshare. Most franchisors participate in ongoing research and developments in order to improve existing products and develop new ones. One-man operations rarely have time or resources for such an undertaking, while franchise systems are staffed and organized to do so.

4. Performance Benchmarking – Businesses are managed by the numbers that drive them. Taking action on your key performance indicators is a crucial factor in building a strong and sustainable business. When similar businesses, operating nationally, generate the same type of stats, each operator can use these “benchmarks” to develop actionable business plans and monitor their performance. Very small chains, or the mom and pop operator do not have the benefit of getting a look at a systems critical numbers necessary for projecting sales and profitability. Moreover, many top concepts utilize “Owner Groups” where franchisees come together and work on each other’s P & L’s and business challenges. These peer groups offer valuable support and feedback as seasoned franchisees understand your business intimately and can help you reach your goals.

5. Executive Talent – By partnering with a strong franchisor, you are, in essence, hiring a team of top-notch professionals to support you. Most systems have a Manager, Director or Vice President of each discipline. Marketing, Operations, Training, IT, Real Estate, and Product/Service Quality, as well as a few executive level management people that run the show. As the franchisee, you have access not only to your own field support people, but any executive you need to help you, usually at any time. The contribution these seasoned professionals can add to you and your business is invaluable and often overlooked as a specific benefit. Get to know key players during Discovery Day at the corporate office and realize their immense value.

I hope this helps you and your business partner realize why franchising is, without a doubt, the strongest business start-up model available to potential entrepreneurs. Wishing you all the best, Mariel

Mariel Miller Organizational Development
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