This one is an age-old debate, and not really a debate as much as it is a discussion. The correct answer here is this: There is no correct answer. At least, not one which will fit every person and their situation. In this article, we will discuss the pros and cons to both and hopefully bring you a little more clarity as to which one may be a better fit for your specific situation. Please feel free to contact us with your feedback and/or questions by clicking the Learn More link at the bottom and we’ll look forward to opening a dialogue with you over the phone and in person!
Franchising, in general terms, has proven over time to be the most successful business model on the planet. We can say this with certainty, as over 90% of franchisees remain in business after their fifth year in business compared to less than 25% of businesses that “go it alone.”
Furthermore, over 40% of all sales in the U.S. go through a franchise location of some sort. Think of the Subways, the Ford and Chevy dealerships, the Remax and Keller Williams offices, and the list goes on throughout every industry in every market sector. Franchise locations have an immediately higher chance of success and here’s a few reasons why:
1.) Systems and processes. If anything will ensure your success in business, it’s this one. That’s why we’ve put it at number 1, although the others are in no specific order of importance. A good franchisor has already made the mistakes that you would’ve made yourself and has systems and processes in place to alleviate your risk while at the same time accelerating your growth. Using these systems and processes will allow you to more quickly grow to more than one location if that’s your goal, so the trade-off for paying the royalties is faster business growth and higher profits, sooner. This is why even experienced entrepreneurs love a good franchise opportunity. In fact, a friend who has been in the restaurant business now for over 20 years has nearly 1,000 franchise locations and wouldn’t dream of opening his own for this very reason.
2.) Brand recognition. Think about this for a moment: When you’re traveling across the country or even across the county, are you more likely to make a quick stop at Wendy’s to pick up a spicy chicken sandwich or the local fast food restaurant that you’ve never seen before? Chances are great that the Wendy’s that you’re stopping at is owned by someone completely different than the Wendy’s that you have at home but you feel immediately more comfortable with the restaurant because you “know” the brand. It doesn’t matter that you don’t know who owns it because you’re quite certain you’re going to get the same thing at every location. That’s what buying into a good franchise system does. Multiple locations allow people to see the brand over and over and for that reason, even before they know your business and its owner, they feel more comfortable with it and are more likely to spend money within it.
3.) Advertising buying power. This is a nice benefit as well! As a small business owner, how much advertising and web marketing power will you really have on your own? A couple thousand bucks a month while you’re getting started maybe? A good franchisor will have an ad fund that every franchisee contributes to and they will likely have an ad council that is made up of current franchisees like yourself that will decide how and where to spend that money to drive the collective group more business. The power of a group’s money can go far further than yours alone and it will also spread the risk amongst the other franchisees. If an advertising decision turns out to be a mistake, you lost a few hundred bucks instead of thousands of dollars.
4.) The power of group evolution. This, more than any other thing besides the systems and processes that come with the brand, can be the reason why franchising is so successful for both franchisees and franchisors. Think about it like this: When a business that you’re competing with in your own market finds something that works well within their own business, do they immediately pick up the phone to call you and tell you about it? Chances are great that the answer to that is NO. As part of a franchise system, every time a franchisee within your network finds something that improves their business and the system as a whole, it’s usually presented and implemented throughout the collective, allowing you to further increase your growth and profit potential. Nothing like having a giant group of business consultants at your side 24/7/365 who want absolutely nothing more than to see you succeed!
5.) Vendor buying power and relationships. Franchisors and franchisees by their nature buy more products and services from their vendors than one off small businesses throughout the community. Because of this, vendors give discounts to those good sources of business. This transfers to increased savings to you as a franchisee, allowing you to buy more advertising or product or whatever you’re sourcing for less cost and increasing your profits. A lot of time, this aspect alone pays for the cost of the royalties, and when you combine it with the other benefits, franchising starts to look like a no brainer for many people.
The list could go on quite a bit longer, but these are probably the best examples of reasons why becoming a franchisee may be a good long term fit for you. If you are looking at business as something that you would like to help increase your wealth while at the same time minimizing your own risk and are willing to be coached and follow proven systems, then buying a franchise makes perfect sense whether you’re brand new to business or an experienced business owner. If, on the other hand, you are a free spirit who prefers to cut their own path and make their own mistakes, buying a franchise may be a horrible fit for your style of business ownership and your own personal vision. The decision here really lies within you, and as we mentioned, there is no wrong or right answer for every individual person.
If you believe that purchasing a franchise may be right for you or you still have questions, our staff is happy to assist over the phone and in person by answering those for you! Simply click the Learn More button at the bottom of this article, and we’ll call you as soon as we’ve received that correspondence!
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