Start Your Own or Buy a Franchise?

When you purchase a franchise, you are not running your own independent business.  You (the “franchisee”) obtain the right to operate an individual business unit of a parent company (called the “franchisor”). You are granted the right to use the company’s branded name, sell their products or services and leverage their technical expertise. In addition, you agree to conduct business according to the franchisor’s developed system (marketing, operating and training) and management techniques. This is done in exchange for an initial franchise fee, ongoing royalty fees and ongoing advertising fees.

Benefits

For franchisees, the primary benefit to buying a franchise is risk minimization.  Starting a business is risky and being able to leverage others’ proven procedures helps reduce that risk.  Other benefits include:

  • Use of an established business model and operating system.  This eliminates much of the trial and error that comes with starting a business from scratch.
  • Initial and ongoing training and support. The franchisor provides initial training regarding the running of your business unit, which is helpful if you are new to the industry or even a new business owner.  The franchisor assists you in selecting your site and in obtaining financing, although in many cases, the franchisor does not directly provide the financing.
  • Ongoing support. Once your business unit  is up and running, you will continue to receive support from a  centralized support center and a network of field-service managers/reps
  • The selling power of a known brand. Because you are opening a business unit of an already established brand, you will need to spend less time and money on establishing one.
  • Lower costs through group purchasing.  The size of the franchise network provides group purchasing power that can help reduce costs.
  • National and regional advertising campaigns. If you purchase a franchise from a nationally established company, you can benefit from their advertising campaigns.  However, in many cases, local advertising initiatives are up to the individual franchisee.
  • Website and social media support. Much of today’s marketing is done online and through social media.  Franchisors have developed best practices around both these avenues, and (in many cases) allow the franchisee to leverage their branded websites and social media sites, thereby allowing the franchisee to focus on his core business.
  • A network of peers.  Networking, benchmarking and supporting is available through a company intranet and annual conferences.

Not for Everyone

Not everyone is cut out to be a franchisee.  If you are a true entrepreneur and value total independence, then franchising is not for you.  Buying a franchise means working within an operating system and a marketing system that have proven to be successful for others.

The lack of independence goes beyond system compliance.  Most franchisors mandate:

  • the types of goods and/or services that can be sold
  • what your storefront/office, marketing materials, uniforms, etc. must look like
  • which company-wide promotions you need to follow
  • where resale products, supplies and materials can be purchased.

You must decide beforehand whether it is worth trading off your independence and personal control for the proven consistency of a pre-established operating system.

As with any business opportunity, there is no guarantee of success, and there are trade-offs to be made. Franchising is not a no-fail solution- what works well for one person can fail another. One of the most important things is to focus on is a franchise that is in a growing industry.

If you are interested in working towards your own future and building your own wealth, Snelling can help.  We have a network of over 100 franchised offices across the country.  Our industry is booming, and is primed for growth through the next decade.  For more information, I invite you to visit our Franchise Opportunities page on the Snelling website or contact us at franchise@snelling.com.

By David Allen, Snelling.com

NOTE:  A full-color, downloadable PDF is available.  

This article has 1 comment

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