So you think you want to buy a franchise, but you’re not so sure it would be the right choice. After all, why should you spend a premium on a big name when you can just duplicate their efforts? Think again. There are a few good reasons why copycatting doesn‘t work, and in hard economic times, these reasons make even more sense. We can’t say enough about the security factor of choosing to invest in a franchise as opposed to a new startup. Below are 5 advantages of franchising.
1. The Power of the Franchisor’s Brand
The first thing franchises offer franchisees is a strategic identity that is not only effective, but it also has a cumulative market impact. Corporate brand identities have proven success in the marketplace. Mega-brands like McDonald’s and Dunkin’ Donuts have spent millions on their branding and logos, and the franchisee gets to take full advantage of this market image.
Most established franchisors have already survived decades in their respective industries and are easily identifiable to the public. A successful brand is one that is remembered, and franchised businesses have some of the most successful brand identities in the world.
The name recognition that comes with an established brand, as well as the franchisor’s system standards that all franchisees must follow, assures the customer that they can enjoy the same quality of experience and products in your location as in any other location. This consistency benefits all franchisees in the system.
You get to take advantage of the fact that a family from out-of-state, for example that has previously enjoyed the franchise system’s products and services will seek out your business because of their past positive experiences with the brand. In fact, like an old friend, they are counting on you to be there.
2. Advertising Programs
Advertising can be one of the biggest expenses for any new business and for a good reason. You can’t survive without effective advertising, and effective advertising is expensive. These days, even if you have a prime location, if customers are unfamiliar with what you have to offer they won’t come in.
Franchise systems offer national advertising campaigns that are included in your franchise fee. This is a huge benefit when considering a franchise. Franchisees are typically also required to invest a certain amount in local marketing and advertising, with the franchisor approving the materials before they are run to ensure they conform to the brand standards and promise.
3. Opening and Operating Experience
The process of opening a privately owned business is complicated and daunting, especially for anyone getting into business for themselves for the first time. But a franchisee can immediately benefit from the franchisor’s experience and tested operating system for opening that specific type of store, from advanced training, documented standards and procedures, to opening inventory levels and grand opening marketing strategies. Additionally, the franchisee can network with other franchisees in the system, who have gone through the process of opening one or multiple locations and can offer their advice.
A franchise system also provides multiple advantages related to operating experience once the franchisee’s location is up and running:
The multiple franchised locations in the system create increased purchasing power, which can result in lower costs for supplies, inventory, and other goods.
Regional or national ad campaigns help draw in a bigger customer base to each individual location.
A franchise system can be flexible in trying new products or services by test-marketing in a few locations to see the impact on a limited scale before rolling it out to the entire franchise network.
A franchisee enjoys the protected reputation of the franchisor. “Protected,” because there are designated legal departments that take care of the inevitable issues like lawsuits, accidents, and difficulties with labour. The reputation of the franchise is important enough – it is what breeds positive expectations that keep patrons loyal – but this benefit coupled with a built-in umbrella of legal protection is an incredible bonus and one you cannot get as an independent.
Unless you were raised in the specific business you are trying to start you will need special training. Franchise headquarters can provide training in everything from the technology involved in the accounting, to the transaction and cash handling procedures. Ongoing and online support is typically available, as well as special alerts and continuing education.
Franchisors want you to be successful, and to do that they make themselves available every step of the way. After all, they want to keep expanding their system, and high success ratios allow them to keep bringing potential franchisees in the door.
Source: the balance small business: https://www.thebalancesmb.com