Franchising is the perfect opportunity for anyone looking for a career change, a fresh start, or a chance to be their own boss.
Becoming a franchise partner can be a great business model for hard-working and motivated individuals looking to become business owners. As a franchisee, you can have the chance to start your own business with the support of a strong brand, a tried-and-true business plan, and industry expertise.
What is Franchising?
Franchising is a way of doing business that allows business owners to take advantage of brand recognition, a vast knowledge base, and assistance with business planning, marketing, accounting, customer relations, and more. Because of the countless benefits it offers, one in seven businesses in the United States is a part of a franchise!
Despite popular opinion, franchising is not just for restaurants and fast-food chains. Spas, gyms, home improvement services, and home health care are just a few of the many industries that have entered the world of franchising.
Franchisors want to see their franchisees become successful and profitable. A franchisee’s success helps to build up the overall reputation and profitability of the brand. That is why franchisors often provide ongoing support and guidance to their franchisees. Many have formed close-knit communities to encourage a positive company culture throughout the entire reach of the company.
Franchising is the most sure-fire way to own the successful business that you’ve always dreamed of. 50% of new business start-ups fail within the first five years, but 90% of franchises are successful!
Types of Franchise Models
Franchising is a broad term that can be broken down into two main types. The first is Product Franchising. This is when a franchisor owns the right to a product, brand, or trademark. They sell their franchisees licenses to use the name or trademark for business activity.
The second and more common type is Business Format Franchising. The franchisee has access to the business plan and brand name use in exchange for a fee and ongoing royalties, which are a percentage of gross sales. The franchisor provides a range of different services to help each location maximize its success.
In this model, both parties sign a franchise agreement regarding usage rights and terms, specifications of territory, length of the agreement, costs and fees, support, and any training that will be provided. Nearly all of the franchises you come across in the U.S. are categorized as Business Format models.
Franchises can also be a part of a larger overall structure. Some involve operating several different brands under a single organization. The associated brands benefit from increased economies of scale and market penetration to increase profitability.
Some experienced franchisees may also choose to co-brand. This refers to when a franchisee operates two different brands from the same location. The advantage of this is lower leasing or real estate costs. It can also greatly increase profit margins.
Be Your Own Boss!
Business ownership is a promising venture for many Americans, young and old. Whether they are corporate refugees, tired of their current jobs, or simply want to be their own boss, many people are either forming their own businesses from the ground up or taking advantage of the many successful franchise opportunities available.
Owning a franchised business is similar to owning a small business- it is 100% yours and you are the boss! But in exchange for the license to sell certain goods or services and use brand trademarks, you must follow certain guidelines set forth by the franchisor and pay them a small percentage of your earnings in the form of royalties.
It is a tradeoff, but the support offered by the franchisor and the brand recognition that comes along with it is usually well worth the investment.
Owning your own business is challenging and potentially life-changing. Especially in the beginning, it can be stressful and costly. It may require a high initial investment and learning a new set of skills. With the proper discipline and determination, however, owning a franchise can offer many great benefits that a traditional job simply cannot.
Some of the benefits that franchised business offers are:
- Scalable business models
- A cohesive culture among franchise locations
- Brand awareness
- Franchise support and resources
- A tried-and-true business plan
- Marketing strategies and assistance
- Access to the latest technologies and industry developments
- Lower financial risk
- Accessibility to capital
- Opportunity to become your own boss without starting from scratch
Business ownership can help you achieve independence, greater flexibility, and personal fulfillment. It also allows for greater profitability, continued learning, new opportunities, and the chance to be in control of your future.
Do You Have What It Takes?
Before investing in a franchise, it’s important to take into consideration the financial requirements, the opportunity, the local market, and whether the company’s goals and values align with your own.
Franchising brings about a variety of opportunities for both the franchisor and franchisee. For the franchisor, it allows for faster expansion, lower costs, simpler management, and enhanced market penetration, all of which can increase overall profit levels for the brand and quickly build a positive and widespread reputation. The franchisee also benefits from the brand’s pre-existing reputation, marketing, network, and customer base.
It is entirely up to you how involved in the day-to-day operations you would like to be. You can choose to be a full-time owner/operator, hire a manager to run the operation on your behalf (this is known as being an absentee franchisee), or settle into a role somewhere in between.
Most importantly, if you don’t have the passion to run your own business, you won’t be successful. There will be long working hours and many challenges in the beginning. But if you are willing to put in the effort, you will reap the many benefits that come along with being a franchise partner.
Deciding to become a franchisee can be both exciting and overwhelming. There is a lot of information to take in and a lot of responsibilities that come with it. Rest assured, you will not be in this endeavor alone. One of the many benefits of franchising is that you are in business for yourself, but not by yourself!
Visit some of the following resources if you are interested in learning more about what franchising can do for you:
Stay tuned to our blog to learn more about the opportunity that franchising offers prospective business owners!