Starting up a new business from scratch can be an incredibly daunting prospect with so much to think about and no guarantee of success – which is why many people opt to buy into an existing and proven business model instead through a franchise agreement.
There are many advantages to going down the franchise road rather than trying to start out on your own, including an already established model, lots of support and training, and more likelihood of securing investment, to name but a few.
We spoke with our friends from Crunch accountants and they gave us these top reasons why franchising works best for new entrepreneurs:
Strong support system
With a franchise agreement you are not alone – there are a whole host of other franchisees to talk to and meet with and you will get support from the head office. There are normally opportunities to network and share ideas with other franchisees, so while you are running your own business you are not left alone to do it – there is a strong support system from day one.
Lower risk factor
While there are always risks in opening a new business, with a franchise it is considered a much lower risk than a brand new business because you are buying into an already proven business model which has succeeded elsewhere.
You are also more likely to succeed in securing finance because you will have figures available from other franchisees and will be able to prove its validity as a business from day one, as well as having a realistic idea of how much money you will be able to make.
Better viability checks
One of the key advantages to a franchise is there is far less guess work involved when it comes to the viability of the business. You can see information from other franchisees which prove the business has worked for them, and record of success already achieved will help to demonstrate the potential viability of your business.
If you were setting up a business from scratch you really have no way of knowing how it will perform other than by asking people if they might be interested – you can’t emphatically prove its viability because you have no background data.
Higher overall success rate
If you look at the facts and figures around business success franchise businesses always have a higher rate of success than start-up businesses so it’s worth bearing that in mind. This is because the original franchisor has already done all of the hard work and proven the model works, taking out a lot of the risk for the franchisees.
Well-established business model to follow
One of the reasons franchises are more successful is because the franchisor generally provides a strong plan and all that the franchisee needs to do is follow and implement it. There is no need to reinvent the wheel or to guess what might work.
It’s a case of taking the existing business model and setting it up in your particular area. You might want to make a few tweaks but there is a reason the business is set up in the way it has been, so it can make life much easier.
A recognised brand to work with
One of the hardest things with a start-up business is getting the name established and fighting through the competition and noise to create a recognised brand but with a franchise you already have that in hand.
The branding, the name of the business and the style will have already been established and are provided for you to use, so you don’t need to spend time creating and planning all of this type of marketing material.
You will be setting up an established brand which already has a good reputation which will make your life much easier when people ask what you do and where you work – it’s much easier to get customers in through the door when they already know your name.
Many franchisors have already get relationships in place with preferred suppliers and with other partners in the industry so you can benefit from the discounts they have negotiated and the partnership agreements already in place, without having to do all of that work for yourself.
Joining as a franchisee means you get access to all of the work already carried out by the head office and the other franchisees that have gone before you so you can benefit from all of that knowledge and those relationships.
Depending on the chosen industry most franchisees will be offered a training package as part of the fee so full training on the best and most established ways to deliver the business successfully will be given to you as a new franchisee.
If you were starting a business from scratch there would be no-one telling you how best to run and deliver that business or to support you from the ground up in your first few months as you get started.
Starting a business is the dream life for many entrepreneurs but coming up with an original and unique idea which is needed by a distinct market place is a big challenge in itself, not to mention all of the work that is needed to test the market and check if the idea is viable.
Even if it is, securing funding for a start-up is difficult, not to mention coming up with a business name, brand identity etc… For many buying into an existing franchise business is a much better and less risky option.
As a franchisee you get the best of both worlds – the ability to run an independent business and all of the freedom that brings, without all of the hassle and risk of trying to start from scratch. You get to deliver an established business model, with guidance and support and an already recognisable brand and reputation, putting you one step ahead of the competition without even trying. Franchising works best for new entrepreneurs by providing viable established business models.