Should You Franchise?

The decision to invest in a business is a monumental one. In fact, especially for first time business owners, it can be one of the most significant decisions that an individual makes in his or her lifetime. The commitment to invest a large sum of money, often an individual's entire life savings, into a business can be a gamble even under the best of circumstance. Therefore it is crucial that any potential investor put him or herself into the best possible position to succeed. Franchising is one means of doing this.

There are a number of benefits to entering into a franchising agreement with an existing business as opposed to going it alone and establishing your own brand. Starting a business under an already successful banner can provide an edge in the marketplace. This can be a critical asset, especially in the fragile stage of developing a new business.

Brand Recognition

Being able to start a business under a name that is already known and accepted by the public is one of the greatest benefits of franchising. A franchise operating under a successful franchisor starts the business with a pre-existing customer base. Even though the business location is new, people are already well acquainted with the services provided and have an already established affinity toward the brand without any heavy promotional activity done by the franchisee.

Most small businesses that fail do so within the first year because they simply cannot get the public interested in their business. This is, essentially, a marketing issue. When a person enters into a franchising agreement, this issue is taken on by the franchisor, removing the bulk of the burden from the franchisee.

Marketing

The brand recognition mention above stem directly from the marketing campaigns run by the franchisor. These large corporations can advertise extensively on a national level, something well beyond the scope of the small, independent owner. This provides the benefit of not only local brand recognition, but nation-wide coverage. People travelling are much more likely to stop in at a restaurant chain they know and trust than to visit an unfamiliar, independently operated eatery. The same holds true for motels, gas stations, and other businesses.

Support

Franchisees also enjoy the sense of security that comes from having a well established business model and a strong network of support. Franchising takes a lot of the guesswork out of business ownership. Running a business requires a lot of trial and error. Unfortunately, the errors can be disastrous and ultimately ruin a business.

When an investor buys into a franchise, most of the error has already been taken on by the franchisor and preceding franchises. The new owner is provided with a plan that is built on years of practical, real world experience and does not have to assume the risk him or herself. The franchisee can also draw upon the experience of other franchise owners within the organization when confronted by issues within the individual franchise. This support is the crux of the famous maxim, "In business for yourself, not by yourself."