Starting a business can be both exciting and challenging. Many people launch their own business concept and succeed. But many don’t. Depending upon which statistic you reference, about 50-80 percent of new U.S. companies fail in their first five years.
If you are ready to start a business, but don’t want to go at it alone, franchising can offer you a business opportunity with less risk, more reinforcements and proven results.
Franchising comes with a playbook. Everything is laid out for you – from how to ship a package to how to make a sandwich to how to change the oil in a car – the guidelines are there so that you have the best chance for success. You get to see the operations manual before you start to run the business. This is a huge benefit opposed to having to write your own plan!
Here are some other reasons you might want consider franchising instead of starting a brand new business of your own:
A well-known franchise comes with proven brand recognition. Brand building takes time and money, which the franchisor is responsible for, and your franchise location will receive those benefits. As a franchisee, you will be responsible for running local advertising and local marketing support. But when you are on your own, building the brand reputation of your business is solely up to you. Depending upon your market and your competitive set, marketing and advertising can be a considerable investment. A recognized brand makes an immediate connection with consumers – something that can be more of a challenge with a brand new idea.
When you start your own business, you will need all the support you can get! Depending upon the type of business you want to open, employees, family and friends supporting you may not be enough. A franchise opportunity offers backup. The type of support you will receive as a franchise may vary, so ask a lot of questions. Most franchisors offer location/real estate support, equipment purchasing support (along with discounts you receive as a benefit of being part of a much larger purchasing organization than if you were on your own), legal support and that ever-important marketing support. Also, many successful franchise operations offer regional consultants who will visit your location to offer support, while ensuring your location is in line with brand standards. Ask the right questions and find out about all the support options available – even if you think you may not need it. For instance, does the franchisor offer customer service or social media support?
Going in with eyes wide open
When you explore a franchise, you will be able to learn a lot about your potential to earn, what a day in the life at your business will be like and what it will cost you to get your business started. A franchise disclosure document (FDD) is a legal document you will be able to see before you decide to buy a franchise. This legally required document tells you all about the fees, costs and average incomes of franchisees. However, don’t believe everything you read. Do your homework! The FDD isn’t the only thing you want to study.
You want to meet and interview other franchisees. Talk to as many franchisees as you can. Talk to franchisees in different types of operations so you can learn which type of business is best suited for you. Talking to a successful owner, learning both the great and the challenging aspects of the business, is a great way to find out more about the business. You also should check the FDD to see if the franchise you are considering has high closure rates (you can view this by state, by year). The FDD has to disclose openings and closings, along with any pending litigation.
You may have worked in the type of business you are considering opening... but have you received formal training? Franchisors offer some level of training to all incoming franchisees. This can range from webinars to award-winning training programs. Make sure you ask what kind of training you will receive at the beginning and ongoing. Some organizations (such as The UPS Store, McDonalds and 7-11) offer training that will bring you into a classroom setting, as well as into store locations for hands-on training. Most likely, your training will last over many weeks before you open your franchise.
And once you are up and running, find out what the organization offers in continuing training and education.
Better Chances for Success
Buying into a proven business model with a history of success offers a greater chance of success than starting something new. Franchisees benefit from the franchisor’s support and national brand recognition. And while it is stating the obvious, becoming a franchisee is becoming a business owner. If later, you still want to open your own business concept, the opportunity will be there…and even better, it will come after you have become a seasoned business-operator.
If you are ready to start a business, franchising can offer you a proven plan with the support you need to succeed. Add your entrepreneurial spirit along with your ability to follow training, and you are ready for an exciting and rewarding adventure.