Buying a franchise is usually a good option for those who consider starting a business from scratch too scary and buying an existing business either too costly or just not the right option. What is the franchise? A franchise is a setup where you pay another business an initial fee and then ongoing royalties in order to use a trademark, business product and the right to use the franchisor’s system of doing business and sell its products or services.
The advantages of buying a franchise is that you get to buy a proven business system. You get it to run a business with an established system of marketing techniques, selling strategies and a reputation and brand name to go along. If it is a well-known franchise, the customers are familiar with the name and feel confident spending money at a business knowing that they will get the same product that they are used to.
For example, McDonald’s is the most popular franchise system in the world probably. Customers know that they will get exactly the same food in any McDonald’s franchises all over the world. So while you inherit the business system from another business, you get to make the sales and keep the profit apart from paying a portion of it to the franchisor as ongoing royalty.
For this royalty and business set up you get a proven system of operation, training which can help a new entrepreneur avoid simple mistakes during startup. If the franchise has a good track record you can be sure that you would inherit a system where the daily routine operations have been perfected through much trial and error.
The successful franchisors have usually conducted a lot of marketing research in order to develop the product. Many of the popular franchises or big corporations make an immense amount of money from their franchise business run by entrepreneurs all over the country and all over the world.
Some of the common aspects of starting a business like conducting a market research and making a business plan is taking care of you by the parent company. The product is already there and the marketing and selling strategies is helped a lot by the fact that you are running a business on well-known brand name.
You will also enjoy the advantage that comes with having strength in numbers. Because franchisors are large corporations they purchase the raw materials required for the products usually involve. It means that the cost of running a business and producing the product of the service would be much less for you that if you want to do similar work on your own.
Being associated with a known brand name also give you an edge in dealing with suppliers, lending institutions, negotiating for locations etc. Some suppliers do not like to deal with new businesses and personal businesses where as many lending institutions and banks may not want to lend money to a first-time business startup.
Is Starting A Franchise Business The Right Decision
In certain circumstances many of business entrepreneurs can find the business model of a franchisee too restrictive. When you take a franchise of a certain business, you usually have to follow the rules, regulations and the business model that the mother/patent company stands for. When you buy a franchise you inherit a complete system and adhere to the way of running a business.
The strictness of the implementation of the rules will depend upon the nature of the business, the company itself and your relationship with the franchise business. A very often quoted saying about franchising is that it puts you in business for yourself but not by yourself. This means that you get continued support from the parent company. This support is also in the form of monitoring that you are following their rules and regulations.
Many business owners might not want to have this kind of interference in the business and would like to be completely independent. If you are the person who has a new creative idea for a business and would like to have the gratification of starting something wrong right from scratch, then a franchise business may be the option for a.
Normally people who quit their executive jobs find a franchise is a good option of starting a business on their own. These executives are used to doing a job that involves delegating work, managing logistics, processing paperwork etc.
Since a franchise takes away many of the hassles of setting up a business from scratch such as creating a new customer base, generating sales, developing marketing strategies, a franchise owner can spend most of his time in managing the business. In fact starting out with the franchise could be easier way to transition yourself into a full-blown entrepreneurship sometime in the future.