Becoming an entrepreneur is risky business. You are putting your money and livelihood on the line for the chance of owning your own successful business. There’s nothing more exciting than becoming your own boss, especially if your current job has you down in the dumps and desperate for a change. Entrepreneurship isn’t for everyone though. It requires the desire to achieve something magnificent in your life, and be successful at it. Never become an entrepreneur because you hate your current job, but you lack a genuine desire to bring a product or service you’re passionate about to the public.
If you believe you are genuine in your desire, then the question is whether you should open an independent small business, or buy a franchise. While there are plenty of advantages for an independent business, buying a franchise has unique and significant benefits to take into consideration.
A franchise is a contractual agreement between a franchisor and franchisee wherein the franchisee has the right to sell the franchisor’s product or service and take advantage of their proven operating system to follow through on this right. The franchisee pays royalties to the franchisor to use the name and operations of the franchisor, while gaining brand recognition, proven products, and extensive training, amongst other benefits.
The advantages of franchising over an independent small business include:
- Financing- There is a franchising fee to pay before the franchise is officially bought. Not everyone who wants to become an entrepreneur has the capital needed to open a business without financing, which is difficult to acquire for many people. There is a higher chance of success in gaining funding if you’re buying a franchise rather than opening a small business. There is less risk involved in a franchise, making the banks more trusting. Franchising may also cost less in the long run.
- Risk- The risk factor doesn’t just apply to financing. The fact that there is less risk involved also means you can worry less about the decision you’ve made. There is still a risk; there is a risk in everything you do. Franchising is just a smarter approach to entrepreneurship because even though you’re are in business for yourself, you’re not by yourself. The franchisor is there to support you in every way it can.
- Support- After you buy the franchise, your franchisor will, of course, provide you with extensive training in both the operating system and the product/service you will sell, but it goes so much further than that. Beyond the training, a franchisor worth their salt provides you with technical support, marketing support, and some even have a call center. There is also pre-opening support and ongoing support for the life of your franchise ownership. Remember, the franchisor wants you to succeed. When you succeed, they succeed.
- Established- If a company is franchising, they are established and confident in their industry. They have brand recognition and a tried and true product/service to offer. Always do your research before buying a franchise; there will still be duds you need to avoid. But an established and well-known franchise has brand recognition and an established client base that multiply your chances of success ten-fold. Think of McDonalds and Subway. Who hasn’t heard of them? McDonald’s has over 36,000 locations, and Subway has 35,000. Granted, there are a lot of fantastic franchise companies out there with far-fewer locations, so don’t count out the smaller ones. Always find the one that’s the best fit for you, not your wallet.