A business out the box.
By following a proven business model, franchising is becoming much more appealing as it already is a tried and tested business model that has already gained traction and generating profits. This dramatically speeds up the process while reducing the risk involved, making for an easier entry into business.
Lower Failure Rate.
A new start-up means to risk a high failure rate. 20% of businesses fail in their first year and around 60% will go bust within their first three years. The purchase of a business format franchise offers the investor an established concept that has been proven successful. Statistics show that franchisees stand a much better chance of success than people who start independent businesses. The latter face an 80 per cent chance of failing in the first few critical years, while franchisees currently stand a 90 per cent chance of surviving or better.
Easier Access to Finance.
Banks are more likely to finance the purchase of a franchise than the launch of a new business. An established franchisor may even help its franchisees secure finance and have very close relationships with chosen banks.
Franchisees enjoy invaluable assistance in the form of training, mentoring and ongoing support, and help with statutory requirements and troubleshooting. Some franchisors also help with site selection, lease negotiation and more. Small business owners often have very little support or lack a support team with business acumen.
Franchisees typically operate under a brand name and image, which is nationally or internationally recognised, promoted and respected. This accelerates local market uptake and business development and reduces customer acquisition costs.
Customers trust that the individual locations of a franchise network to offer reliability, good value and service.
Lower Inventory Prices.
The collective buying power of a franchise group can lower the cost of inventory and equipment, saving franchisees a great deal of money. Independent businesses usually have less bargaining power with suppliers.
A Peer Network.
Franchisees enjoy the opportunity to share their challenges and seek advice from other like-minded entrepreneurs within their franchise system.
Easier Staff Recruiting.
Finding good employees is a critical success factor for many independent small business owners. A franchise business with a recognised name will have greater recruiting power than an unknown business entity.
Exceptional Opportunities for Growth.
Ongoing research and development by the franchisor provide franchisees with new business opportunities, adding value to the business. The very development of the franchise business creates equity for the franchisee by increasing the resale value of the business.
Individual Rewards & Collective Support.
Franchising offers individuals the opportunity to be in business for themselves but not by themselves.
Professional & Personal Development.
Franchisors typically offer their franchisees comprehensive training programmes in sales and other business skills. Franchisees also gain education, recognition and social opportunities via meetings and communication with fellow franchise owners