You have officially reached the second episode of 'Ten to One'; the new series of articles providing useful facts about the franchise industry. The series began with a list of ten points, this post features nine…so you can guess how many the next will have.*
The first post covered the unnerving task of finding and buying a franchise, by splitting the procedure into ten little steps. But although the process has now been simplified (you're welcome), there is little point going through it if you are not going to profit at the end.
People always sing praises about franchises, and here are nine convincing reasons why you should invest in one:
Predicting the Future
The most valuable factor of a franchise is that you already know the business will work. Much money and time have been invested in perfecting the franchise model; the mistakes have already been made and fixed; and the risk of failure has been reduced tremendously (the percentage of franchises recording a profit is nearly always in the 90s!). If the system were not reliable, then it wouldn't have expanded as it did and it wouldn't be able to boast a network of successful franchisees operating happily and often internationally.
Obtaining Investors
Anyone starting any sort of business is going to find meeting with potential lenders a challenge, and will need to have a well-written business plan and a well-dressed appearance accordingly. That said, a franchise's low-risk factor makes it appealing to investors, and often a franchise has an association with a bank. Sometimes the franchisors themselves are willing to lend the percentage of start-up costs still needed, and there are government funding schemes in place such as The Jobs Fund to which you can apply for a loan or even a grant.
Training and Support
A recurring, beautifully clichéd phrase in this industry is: "Working for yourself, but not by yourself." If you were an entrepreneur piecing together a new business then you would need to spend time figuring everything out alone, or with the expensive help of consultants, lawyers and accountants. Pre-launch franchise training usually includes a combination of theoretical classes and hands-on fieldwork, making you knowledgeable enough to start operating immediately. Once the branch is running, franchisees receive ongoing support from head office through many different channels including free helplines, regional meetings, newsletters, and an intranet. Franchisees are kept up-to-date with news and advances in the industry.
Spoiled for Choice
Part-time or full time; management or hands-on; home based or renting stores…franchises are available in a wide variety of shapes and sizes, ranging from paying a small franchise fee and working by yourself (see our low-cost franchises here) to investing a greater amount and working as the employer of a large team. Caring, internet, retail…nearly every industry is represented in the franchise world (except mining).
You're Already Famous
Flexibility? Support? Success? Na, they're all side effects. When you purchase a franchise, what you're really paying for is the licence to use the company's good name and logo. If a brand is already established as strong and reliable, you will have customers coming to you from day one.
Advertising
There is, however, such a thing as a new franchise. This will often cost less and bring more flexibility and excitement, but it may not be so well known. Whether a franchise is old or new, effective marketing tools and advertising campaigns are usually part of its package. Advertising can be international, national, or local, such as a webpage for each franchise unit. Let your franchisor help you cause a stir in the local market as you launch your branch and cut the ribbon.
Centralised Purchasing
This is when franchisees benefit from discounted pricing on products such as ingredients for a restaurant or stock for a store. Sometimes the franchisor may directly provide all of the goods needed.
Charted Territory
Many businesses, such as retail, require face-to-face interaction with clients and therefore it is essential that they find a suitable location to ensure strong customer traffic. It can be tricky to weigh this against high rents and property prices, so having a supervisor to help you strike a balance is a plus. Furthermore, the franchisor will make sure that there is no other franchise branch already present in your territory.
Saying Goodbye is Easy
Even successful franchises must come to an end, and when you wish to sell yours on, there should be many an enthusiastic buyer willing to invest. Your franchisor will probably be able to provide a replacement quickly, which means that you won't even have to do any advertising and interviewing. That'll give you time to concentrate on the more important stuff: throwing goodbye parties and crying.
*Eight.