Why is Buying a Franchise a Smart Choice?
Starting a business can be hard work when you do it independently, but if you find a franchise that appeals to you, you can reap a host of benefits. Here are just a few of the reasons you should think about buying a franchise:
- A proven methodology – to invest in a franchise means that you can start your business following a tried and tested business plan that uses recognized systems, methodologies, and trademarks.
- Branding already in place - it is difficult to launch a new start-up, and it takes time to raise brand awareness and get to grips with the basics of managing a company of your own, from choosing an inventory to finding a business format that works. Franchises already have a reputation and marketing strategy in place. Typically, a franchisee will operate under a recognisable brand name and trademark. As a result, business development and local market uptake is accelerated, and there are lower costs to acquire customers.
- A lower rate of failure – when you buy a franchise, you’ll be investing in a concept that is already established. A franchise has already been proven to be a successful business model, so you can enter the world of business more easily and with fewer risks. The rate of failure of new start-ups is bleak, with 50% of businesses failing in their fifth year. With a franchise, those risks are greatly reduced.
- Easier access to funding – a bank will be more likely to agree to finance a franchise purchase than to agree to finance a brand-new business. Established franchisors may even assist their franchisees in securing finance.
- Valuable levels of support – a top benefit of buying a franchise is the high level of support you receive. As well as ongoing mentoring, training is also available together with assistance with troubleshooting and statutory requirements. Conversely, those who launch their own companies frequently have very little - if any - help in this regard.
- Consumer trust – consumers are more likely to trust a franchise to offer good service, value, and reliability.
- Cheaper inventory costs – franchise groups have collective purchasing power that reduces the cost of inventory. This makes it easier to start a franchise than an independent business.
- Peer networking – another great advantage of a franchise is that there are other franchisees within the network to share challenges with and get advice from.
- Easier to recruit staff – it’s essential to find good employees for business success however attracting skilled team members can be difficult for those who own independent businesses. Franchises have a recognisable name, and that equates to better recruiting power.
- Excellent opportunity for growth – the franchisor will usually carry out ongoing development and research so franchisees can take advantage of new and exciting business opportunities that add value to their enterprise.
- Personal and professional development – usually a franchisor will offer franchisees training programmes in business skills and sales. Also, you can gain social opportunities, recognition, and ongoing education via communication and meetings with other franchise owners.
What Makes a Successful Franchise System?
There are several elements that go into making up a successful franchise system, including:
- A strong track record of ongoing success over several years.
- Strong leadership with an experienced team.
- A strong business system that has been tried and tested over time.
- Excellent business generation and marketing strategies.
- Ongoing field support and initial training.
- A culture of celebrating success.
- Strong creditworthiness and a good financial base.
- A rigorous process for selecting franchisees.
- Happy and positive franchisees who are having a good and successful experience.
- Active membership of a reliable trade commission or association.
Selecting a Franchise that Suits You
When you’re considering investing in a franchise, one of the most important factors to bear in mind is how to choose the best opportunity that suits you. There are countless different franchises for sale, and with so much choice, it can be difficult to select one that is right for your requirements.
Here are some top tips to help you with your selection:
- Take the time to fully explore your local market to understand how much demand there is for the service that the franchise provides and how much competition is likely to be out there in the marketplace.
- Find out as much information as possible about the franchises’ potential, success and overall reputation with consumers and existing franchisees.
- Consider the kind of industry that you’re interested in working in. There are many different types of franchises globally, and there is sure to be one that appeals to you, but you need to put some time and thought into deciding which is best suited to your interests.
- Make sure you’ve calculated the fees and royalties associated with buying the franchise. You need to be certain that you can afford to make the investment and that the ongoing costs of running the franchise fit within your available budget.
- Remember that there is probably going to be a royalty to pay as well as long-term operational costs, so you’ll need to think hard about how much you can afford to spend both in the short and long run.
- Consider if you have the necessary personal skills and experience to run the franchise and make it profitable in the long run. There are some franchises that are suitable for people with no experience in that sector, but many will require at least some level of understanding of the services or products that are being sold to make the venture a success.
- Will the franchisor give you the training and support you need to make the enterprise a success? You should receive help with marketing your business, how to recruit employees, and how to use specialist equipment relating to the industry. For example, a carpet cleaning franchise should offer training on how to use equipment appropriately and effectively and manage your client base with CRM (customer relationship management) software.
- Have some conversations with existing franchisees to find out the struggles and successes that they have had and whether they would recommend the purchase to you based on their own experiences with the brand.
- Make sure that you have a clear understanding of the franchise network and how it operates.
- Take the time to fully read through the franchise agreement and any disclosure document and be certain that you understand how it relates to you regarding the law. Business ownership involves certain legal obligations, and you need to be fully aware of them before you become the owner of a franchise.
Top Performing Global Franchises
If you’re wondering about some of the best franchises to own around the world, you’ll need to know the top four contenders. Globally, there are four key franchises that are leading the way and that represent the most successful purchasing options anywhere in the world.
The most successful franchise anywhere in the world is McDonalds. There are almost 40,000 McDonalds outlets globally. The number of outlets is growing year-on-year too, and it is one of the world’s fastest growing food franchises.
Starbucks is another top performing global franchise. Starting from humble beginnings in Seattle, USA, it is now a worldwide phenomenon and is the biggest coffeehouse chain in the world. It currently has over 30,000 outlets worldwide.
Another food-related outlet that is thriving around the globe is KFC. With its memorable Colonel Sanders trademark and its well-known slogan “finger lickin’ good”, this chain that specialises in fried chicken is popular in a host of countries. Globally, its brand is valued at over $5.4 billion, and that figure will certainly increase in the years to come.
Another food franchise that is excelling globally is Amul. Unlike the other franchises on this top-performing list, Amul is not an American brand. Rather, it is based in India, but it is developing a worldwide presence. Selling dairy products, it is famous for its classic Amul Girl cartoon logo.
It’s Time to Buy Your Franchise
Now that you know how to choose the right franchise for you and are aware of some of the great benefits of investing in a franchise in your country, there’s no better time to start exploring the various opportunities out there that can fit with your personal and financial goals.
If you do your research and take the time to really consider what kind of business you’re interested in, you can reap the benefits of becoming a franchisee no matter where you live.
You can find out more about the various options in your country by contacting us today.