Wherever you go in the world, you’re sure to find a McDonalds or a KFC. There’s even a joke about a Tokyo kid migrating to the US with his family. When he was asked what he would miss most about Japan, he says, ‘McDonalds!’ That’s the beauty of franchising. It allows us to take a piece of home with us, even if that piece is fun, fatty, and fabulous. But while fast food outlets are the most visible, they’re not the only option. You can franchise anything from a real estate agency to a car wash service. But why would you?
You’re Not Re-inventing The Wheel
Franchisers are often (serial) entrepreneurs who are running lots of little businesses. They’re always looking for a gap in the market or an opportunity to make extra money. They don’t necessarily run these hands-on, but they’re certainly the ones paying the bills … and enjoying the profits. If this sounds like you, then franchising is the easiest option. It’s a system that already works, so you don’t have to innovate or find some fresh angle. And it generally comes as a pre-packaged deal, so there’s very little effort required on your part, at least in terms of systems, structures, and day-to-day running, because your franchise comes with a pretty good ‘operation manual’.
You Get A Good Support System
With a good franchise, they don’t just give you a booklet and send you on your merry way. They give you hands-on guidance. They might send someone to your premises to start you off, or they might have a regional franchise consultant you can go to if you need any help. A successful franchise requires uniformity, so they’ll give you a lot of practical advice and support materials such as uniforms, menus, application procedures, day-to-day guides and so on. Some franchises will even on-board you to their computing system for billing invoicing, and emergency tech support, in case you have any queries on the go.
There’s Already A Market Niche
When you build a business from scratch, you have to create an appetite for your products or services. That involves positioning, market research, branding, promotional services, and a lot of leg work. The average business takes 5 years to break even, and few start-ups get past the first few months. Angel investments and social media buzz might push them a year or two. With a franchise, the hard part is done. You have a fully functioning business. You just have to localise it, and your brand centre will give you all the help you need. Also, because the name is already established, you might not need to do more marketing than to loudly announce, ‘We’re here!’
It’s Cheaper That Starting From Scratch
The biggest barrier to many businesses is starting capital. You may need a larger investment than you can raise on your own, and getting funding isn’t easy. The systems are clearly laid out – you could crowdfund, ask family and friends, or get a bank loan. These are all do-able in theory, but you’ll soon realise prying those wallets open is a gargantuan task. With a franchise, your initial cash injection is much lower. Some franchisors will even give you a loan to begin, then recoup it from proceeds. It all depends on the deal you get.
It’s Technically Sound
The really tough part is getting that ‘right deal’, but a skilled franchise lawyer can help with that. They’ll handle all the messy bits like reviewing contracts, checking the small print, and fine-tuning agreements. The lawyer isn’t part of the franchise deal though, so you’d have to pay them out of pocket. Factor their fees into your franchise budget, and don’t try to finalise the deal without legal advice, because a bad arrangement will come bite you eventually. Of course franchises aren’t all fun and games. You have to adjust the system to fit your neighbourhood, and accommodate any local quirks the franchisor may be unexposed to.
It’s Easier To Run
There’s an interesting factor about top entrepreneurs. They don’t have much interest in the mundane dealings of their business. They have adventurous spirits and really just want to see the top layer. They don’t necessarily want to come in every day and run things. A franchise allows this kind of ‘hands-off’ approach. Everything is laid out and slotted in, allowing you to make the right hires and essentially be a ‘sleeping partner.’ There are systems in place to give Head Office easy oversight, and you can use those same systems to monitor the business while you’re out on the beach having fun. Franchises also have a higher success rate than budding businesses, so that helps too.
Read More:
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