Buying a Franchise Vs. Going Alone: 3 Unexpected Edges
Franchises have systems in place that have been tested and refined over time. When you gain access to that system as a franchisee, you get the chance to lower your initial investment, start up more quickly and avoid some pitfalls.
Before you start your franchise business, most franchisers will train you on each aspect of the business, such as finding a suitable location, hiring and training your location's team, serving customers and managing the business. Many franchisers go even further, providing operational literature that gives you guidance on scenarios you might encounter, and offering ongoing support and training. This is done to help you be successful and to ensure all franchises in the system are living up to the standards of the brand.
On top of all those benefits, here are three other advantages you'll receive when you purchase a franchise business that you may not have considered yet.
1. The goodwill generated by the brand
Whether the franchiser has one store or 20,000 across the country, it still has more name recognition that you would starting out as an entirely new business on your own. When that recognition brings some goodwill from consumers, your location will benefit as soon as you open up your doors. This is particularly true for service-based franchise opportunities because the history of the brand's service can be used as part of your marketing efforts.
2. The cost advantage
Surprisingly, a franchise can be less expensive to open than a brand new and independent business. You'll still have to pay a franchise fee plus other costs that are ongoing, but you have the edge over an independent owner when it comes to knowing what equipment and inventory you need. In addition, you may receive better prices because a franchiser has the power of numbers behind it and can negotiate deals with suppliers and make volume purchases. You'll learn how to promote the business without wasting money or time on approaches that don't work or generate a low return, and you'll be in a better position to control startup costs and sidestep expensive mistakes.
3. The staying power
When you decide to sell your business and pursue other franchise opportunities or something else entirely, you may be able to get more for a franchise than you would for an independent business. The transition to a new owner is easier with an established brand for the seller and buyer, and customers won't lose faith in a brand name as easily as they do with independent businesses.
Your brand will play a role in your success as a franchisee, but the system quality and the amount and type of franchiser support you'll receive is paramount to your performance. Overall, the secret behind the success of many franchisers is simply that their franchisees have been able to make a lot of money in the system. A franchise who has some millionaire franchisees has no real trouble when it comes to finding new prospective franchisees.
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