People often end up in financial problems because they spend more than they can earn. Therefore, there are two ways to resolve this problem. First, you can learn how to handle your money better and second, you can find a way to earn more. Starting your own business may just be a way for you to do both of these things. Being an entrepreneur can teach one to be more frugal and resourceful. It is widely believed that running a franchise is safer than starting your own, original business. So, if you’re struggling financially and resolved to solve this issue, you might want to stick to franchising.
Franchising is the concept of buying a license to run an already established brand in your city or neighbourhood. Here are several reasons why this is a good idea.
Franchisor offers assistance
The first thing you need to understand is that a franchisor usually offers some assistance. Since employees have to abide by certain industry standards, the franchisor may send experts to help train your staff. Other than this, you need to keep in mind that the decoration of the area heavily depends on the franchise regulations. After all, every McDonald’s across the globe is designed the same. Moreover, the uniforms are the same and so on. While this may sound restrictive, the truth is that it solves a lot of logistical issues without your investment of effort.
Other than this, you get the protection of having a major conglomerate to back you up. When negotiating with a supplier, you’re not that little restaurant owner. You’re a representative of a major franchise and they might treat you with more respect. Furthermore, your franchisor may connect you to their supplier, which makes your job even easier. By solving these numerous logistical problems, you will have the privilege of being able to focus on core entrepreneurial and administrative tasks.
A franchisor provides logistical support that a first-time entrepreneur would have to appreciate. It solves basic issues and puts your enterprise on the right track.
Franchises are territorial
The first thing you need to understand is the fact that, when buying a franchise, you’re merely bringing a well-known brand to new turf. You’re bringing a renowned business to your local audience and it’s a situation that everyone benefits from. A hidden perk of this model is the fact that if you open up a franchise, there’s no risk that someone else will buy that franchise’s license and open up in your neighbourhood. In that fictional scenario, you, as a small business, would be up against a beloved franchise and your odds wouldn’t look as good.
Keep in mind, nonetheless, that trademarks are territorial, as well. This means that even though you’re buying a franchise that is completely legal and protected by various IP laws, this doesn’t mean that the same goes for your region. For instance, even a titan of the fast-food industry like Burger King, couldn’t run under this name in Australia. Instead, they had to go for Hungry Jack’s. Moreover, Wendy’s couldn’t register under this name in the Eurozone because there was already a food stand in the Netherlands under that name. Overall, it’s something worth checking out.
Trademark, brand and territory are three powerful motivators why going for a franchise is a much superior solution to merely starting an original business.
A plethora of choice
The biggest downside that some people see in buying a franchise is the idea that you, somehow, don’t have enough choice and customization options. Anyone who has ever dealt with two franchises of the same brand knows exactly how faulty this logic is. First of all, there are so many franchises in so many industries that you’re bound to find something you like. The key thing is that you take the fact that you want a franchise and not an original business as your starting point. Even within the same industry, you have a number of options to choose from. This gives you freedom of choice similar to that of starting an original business.
Another thing you need to keep in mind is the fact that the choice of the industry also needs to consider regional requirements. Namely, if you want to start an iced tea franchise, filtering Australian franchises might narrow down your search quite a bit. This will make it much easier to find the right franchise for sale. The key thing is that you understand the importance of knowing your requirements. This will dictate the keywords you use in your search for the franchise of choice. It will also help you narrow down and pick the right franchise when you have several franchises remaining.
In other words, the choice is there but you need to know exactly what you want to avoid the paradox of choice. So, set some metrics from square one.
Franchises are more reliable
The first thing that the majority of people learn about franchises is the fact that they are more reliable and less likely to fail than original businesses. The reasons behind this are quite numerous. First of all, it’s easier for a franchise to provide funding. Franchises already have a proven and tested business model, which makes the majority of investors eager to give you money. It’s also a lot easier to attract better talent, seeing as how brand awareness may help boost the quality of your applicants during the hiring process.
Franchises are also spread all over the globe, which makes it easier for you to see how these things work in practice. Finding a franchise similar to yours in a neighbourhood with similar demographics to your target neighbourhood is not a difficult task. This will provide you with market research and an in-field display of the effectiveness of a given franchise. In other words, you have all the tools to see exactly what’s going on. Since 41% of startups fail because there’s no solid market research, this allows you to circumnavigate the most perilous part of this journey.
The key thing you need to consider is the fact that you’re not starting from scratch. Everything from fundraising to hiring gets easier when you choose to go for a franchise.
Brand recognition and brand awareness
A crucial aspect of buying a franchise lies in not having to start from scratch in terms of brand. With a major franchise, everyone’s already heard of your business. They recognize your logo, know what you have in the offer and so on. This means that someone has already dealt with your marketing for you. Even if we’re talking about a smaller franchise. Chances are that other franchises will have websites and the main franchisor will already have an industry presence. Even without all of this, it’s quite easy for a person to make a difference between a new brand and an industry veteran.
The problem with brand awareness is that you can’t just immediately hop to it. You need to start with brand recognition and this is a slow and painful process. You have to build your brand markings, develop a marketing strategy and just wait for the results. The problem is that you have no idea how long this will take. According to the rule of seven, it takes at least seven instances of interacting with your brand in order for a person to engage with it. However, it doesn’t take engagement for brand recognition. This is not an exact science and with franchising, you may be able to skip a whole process.
Buying a franchise can ensure that you have a head start when it comes to your marketing. This alone can be worth the investment in buying the franchise.
Downsides of franchising
There are some downsides to franchising to be considered, as well. For starters, you’re never really the owner of the franchise. The franchisor can simply decide not to prolong the contract, thus stripping you of the license. This nonetheless is not very likely. The main reason why they’re selling a franchise in the first place is so that they can make money and establish a presence without having to micromanage everything. So, as long as you’re consistent with branding policy and as long as you’re making money, there’s no reason for them to consider stripping you off the franchise.
A lot of people find rigid brand rules to be a much bigger issue. You’ve been to a major fast-food chain and you’ve seen that they’re all alike. All the uniforms, layouts and more. The thing is that you don’t have that much creative freedom. If you’ve always dreamed of starting a business of your own, designing your logo and choosing your corporate colours, then, you might do better to go on your own. Just remember that you’re giving up some of these creative freedoms to access all the above-listed privileges.
The downsides of franchising are serious and worth taking into consideration. Still, they can be avoided and the benefits of franchising may help you overcome this problem.
At the end of the day, making money by buying a franchise and running it may be more reliable than starting your own original business but it still depends on your entrepreneurial spirit. It depends on your ability to make money and run a profitable organization. It’s running a business like any other and doesn’t expect that the franchisor will do your job for you, just because they’re willing to lend you a helping hand. The key thing is that you start something that will get you back on your feet in the long run. A journey of a thousand miles starts with a single step.