The backbone of America’s wealth is its small business owners. An entrepreneurial streak is embedded in the country’s DNA. It is the reason why people the world over come to the United States to pursue the American dream.
Still, purchasing a business is one of the biggest investments a person will make in their lifetime. When the time comes to invest in a business, entrepreneurs can choose to invest in an unproven start-up or team with a franchise company that has an established track record of success. Franchising has been an established way of doing business in the US since the 1850s and was made popular a century later by fast-food restaurants like McDonalds and Burger King. With franchising, entrepreneurs pay a fee to the franchisor and in return, are allowed to apply their brand.
In franchising, they say work for yourself but not by yourself. While an unproven start-up may prove to be successful in a confined area, there are a number of reasons why franchising has worked for countless entrepreneurs. Here are five of them:
Instant recognition: Probably the best part of buying into a franchise brand is the knowledge that its brand identity is already established. In most cases, franchises have built a well-known, highly-visible brand identity via a dynamic advertising scheme often on a national level. For a small business owner just opening the doors of a new restaurant or cleaning business, this is fundamental. Consumers will always turn to the business that they know and trust. Entrepreneurs are buying instant credibility when they buy into a franchise system. For start-up entrepreneurs, that credibility can take years to establish.
Training: Just because you’ve never worked in fast food or the pet industry doesn’t mean you incompatible to certain strands of franchising. While an entrepreneur is investing financially in a franchise, the franchisor is also making an investment in the success of a new franchisee. A flailing franchise will ultimately make the whole organization look bad. In that sense, the franchisor will very often provide a comprehensive training system for new franchisees. You are not alone with a franchise, and many franchisors will take you to their corporate headquarters and teach you how the business operates.
Support: Once you cut the ribbon on your franchise, the franchisor will still provide support for you. The franchisor will be able to guide you through those growing pains, and will often be only a phone call away.
The Franchisee Family: When you open a franchise, you are joining a family. There is large, sometimes national network of other entrepreneurs who have had similar experiences. They provide an invaluable resource who can guide you through trickier moments of running business.
Affordability: The thought of paying a franchisee fee turns many people off of the idea of investing in a franchise. Yet these fixed fees are a sort of hedge bet against failure. While owning your own business means taking all of the profits for yourself, the reverse if also true if you fail. With a franchise, the listed fee is a sort of investment against failure. In a nutshell, these are only some of the reasons why so many entrepreneurs have put their faith (and fortune) in a franchised business.
—
Donald Cranford is an editor with Franchise Direct (http://www.franchisedirect.com), one of the world’s most popular franchise portals.
