Franchise Advantages
Franchise Advantages
WHY BUY A FRANCHISE?
People decide to buy a franchise for many reasons, but what they are looking for is a business that has proven performance, a brand that people trust, systems in place, effective marketing, and an organization that will support them every step of the way. The alternative to franchising is starting a business on your own and unless you have done it before, it is extremely challenging, risky, and expensive. And when you look at the value you receive from a franchise, you begin to understand why they charge you a franchise fee and monthly royalties.
It’s also important to understand that it’s in the franchisors best interest to help you become as successful as you possible can be. Because the more revenues you make, the more royalties they make. And if you were the franchise company, wouldn’t you analyze every aspect of the business and continue to refine your business model. And although growing royalty revenues are important to them, most franchise companies and their leadership are in it because of the impact they have on people, the jobs they create, and the legacy they are building.
Buying a franchise can be the greatest decision you’ve ever made, or it can one of your biggest mistakes. There’s a lot of due diligence that goes into selecting the right franchise because not all franchises are created equal. There are over 3,500 franchises in the United States and I would not recommend more than half of them. And although buying a franchise can seem like a daunting task, working with a consultant to do so can make all the difference.
Franchise Fee: $60,000
Royalty: 6%
Locations: 16 open / 100 sold
Franchise Fee: $30,000
Royalty: 6%
Locations: 7 open / 29 sold
Franchise Fee: $49,500
Royalty: 6%
Locations: 29 open / 100 sold
Franchise Fee: $49,500
Royalty: 7%
Locations: 175 open / 632 sold
Franchise Fee: $45,000
Royalty: 7%
Locations: 236 open
FRANCHISE ADVANTAGES
What makes franchising so attractive to those seeking to start a business is the ability to leverage a brand, proven systems, and so much more. I have outlined many of the advantages that franchises offer to make it easy for you.
Leadership & Infrastructure There are some incredible visionaries leading franchising organizations that have assembled a team of talented professionals all focused on maximizing the success if its franchise owners.
Proven Business Model One of the biggest benefits that franchises provide is a proven business model with fairly predictable unit performance and profitability. Of course, your level of success will depend on your work ethic and ability to follow the system.
Performance Metrics Franchises often share system wide key performance indicators (KPI’s) enabling you to understand where your gaps may be and where you need to focus your attention. That kind of information is invaluable as you set goals and strive to achieve them.
Brand Equity Many franchises have developed significant “brand equity” that is invaluable as a new business owner. Consumers have confidence in national brands, especially ones they are familiar with. And even if they are not familiar with the brand, there is a perception that national brands can be trusted.
Customer ExperienceWhat customers really want is a positive customer experience where they received sufficient amount of “value” for the money they spent. Customer experience is very important to franchisors because brands are built by positive customer experiences.
Training All franchise brands are going to provide some degree of initial training. Typically, training is held at the corporate office and perhaps at locations in that market. Depending on the type franchise, additional training can occur in your market with trainers coming to help you set-up, train your team, and provide owners with additional training. Many franchisors have invested in online training for franchisees and their staff. Online training has gotten very sophisticated in franchising. This ensures that franchisees and their staff know exactly what to do and how to deliver on the customer experience.
Grand Openings Having a massively successful Grand Opening is vital to the businesses ability to gain momentum at an early stage. Utilizing the franchisors Grand Opening Plan and franchisor support makes all the difference. Franchisors provide you with step-by-step instructions and support from their team to make sure you know exactly what to do, how to do it, when to do it, and the resources you’ll need to have in place.
Real Estate & Construction When it comes to “Brick n Mortar” franchises, most franchisors utilize industry vendors that specialize in the data necessary to select real estate locations best suited for their business. Many have in-house real estate professionals and some may outsource to one of the many companies that help franchisors identify suitable locations and they also help with lease review and may assist you in negotiating the terms of the lease . Layout, design, furniture / fixtures, and interior construction (tenant improvements) are often sub-contracted to approved vendors that can cost effectively and efficiently get your location ready for occupancy. All these processes are typically managed by the franchisor while keeping you in the mix throughout the process.
On-going SupportFranchisors provide on-going support for the life of the business. Great franchisors have specialists in each area of business to help franchisees succeed. In addition to having people at the corporate office that franchisees can access, they also have field support people. Typically, field support people are responsible for a specific territory or states and visit franchisees in person to review their progress and help them overcome challenges.
MarketingGreat franchisors are constantly improving upon the branding and marketing systems. And as digital marketing, social media, reputation management, and SEO continues to evolve, they are staying ahead of the curve to ensure you can be effective as possible in acquiring new customers. It’s common for franchisors to have one or more approved vendors in the area of marketing, enabling franchisees to outsource much of their marketing while benefiting from the economies of scale gained from vendors working with all the franchise locations.
TechnologyThe vast majority of franchisors have embraced technology and invested hundreds of thousands of dollars to millions in their proprietary technology. When it comes to operating their business, it’s a game changer, and often provides such a competitive advantage over the competition. Not only does the technology improve the customer experience and engage with customers at such a higher level, it streamlines processes and creates efficiencies that lead to more throughput and overall performance. It also allows owners and the franchisor to measure everything. And when you can measure everything, you can quickly and easily identify gaps that you need to fix that may eroding your profitability and overall success.
Franchisee IntranetMost franchisors maintain a franchisee intranet, which serves many purposes… Internal Communication, Training, Marketing Vendor Information
Peer SupportOne of the benefits of franchising is having other franchisees that are willing to share best practices. Typically, franchisees will have the opportunity to meet each other and forge relationships at their annual conference. Great franchisors create mastermind groups. These are small groups of franchisees that participate in monthly calls to discuss challenges and share best practices. Imagine how valuable that would be if you were a new franchisee. Not only would you have the corporate team, but you would also have perhaps a dozen franchisees on a monthly call to help you.
Vendor RelationshipsAs a business owner, you’ll need all kinds of services from phone systems to payment processing and POS, customer loyalty, marketing and so much more. Franchisors typically take a great deal of time and effort vetting out various vendors that they deem “approved vendors” for their franchisees to use. Most franchisors don’t limit you to just the “approved vendors” but in some circumstances they do. And when they do, it’s typically for good reason. The days of making kick-backs on providing “approved vendors” is pretty much a thing of the past. The bast majority of franchisors are happy to receive their months royalties from their franchisees and do no feel a need to double-dip. Having these vendors are a big benefit and save you a ton of time and money as you benefit from the economies of scale provided by the brand.
Annual ConferencesOne of the best advantages of being a franchise owner in attending their annual conferences. They pack the conferences with educational opportunities, award ceremonies, breakout sessions, guest speakers, vendor fairs, and fun activities for franchisees. These events are used to inspire, empower and build an amazing culture. Many franchisors refer to their conferences as reunions, because that’s what families do when they get together.