As more and more people look to become self-employed and be their own boss, the growth of franchise openings has boomed in recent years. The potential is there of becoming a franchisee as a way to start your own business. In the US alone in 2019, there were over 773,000 franchise businesses in operation.
There is no denying that this business model has its advantages but being aware of the good parts and the bad can help you to make a more informed choice before committing yourself to this type of business.
What exactly are the benefits of running a franchise and becoming a franchisee?
Franchises have a well-deserved reputation for having far better success percentages than start-ups. This is because the model will have been tried and tested over some time. While there are no guarantees of success when starting your own business, investing in franchise opportunities can offer you an excellent "blueprint" for running a profitable firm.
When selecting a franchise partner, it is critical to evaluate the length of time the franchise has been in operation, the number of franchisees the company has, and the organization's financial strength. All of these are essential considerations to ask when assessing different franchise opportunities.
Having the independence of being a business owner without the risk of going it alone is another significant benefit of purchasing a franchise. Typically, franchise business models include training, direction, and ongoing assistance to assist you in growing your company. After all, it is in their best interests for you to be successful.
The degree of support provided by franchisors, on the other hand, differs significantly, so it's critical to understand exactly what you're getting when selecting the ideal organization for your future. Depending on the type of franchise you choose, you can gain assistance in areas like marketing, information technology, and operations.
Any new business initiative necessitates consideration of how you will fund the necessary financial investment, which could be financed from personal savings or a small business loan. Many large banks support franchising, and many of them provide dedicated banking services specifically to franchisees. As a result, you may have an easier time securing financing to launch a franchise business.
The more well-established and profitable a franchise opportunity is, the greater the likelihood of obtaining financing. This is since you are investing in a proven business model with the franchisor's assistance, which provides you with a significantly increased probability of success. In any case, it is recommended that you seek independent financial advice before deciding on your course of action.
Potentially. Different types of franchise options come with additional costs. You are essentially buying an established brand out of the box, so you need to pay for everything this entails. Depending on the opportunity you pick, your costs can range from minimal to extensive. So, a key is being prepared for the financing needed. For example, setting up a home run business offering tutoring services will require lower start-up costs than, say, purchasing a retail outlet where you need to buy stock and equipment running your costs over $350,000.