So you have a killer business plan, and funding, and know your target market like the back of your hand. It’s the perfect time to launch that startup you’ve been dreaming of for so long. Right? Not so fast. Starting up a franchise is a safer bet than starting your own business as an independent company – even if it might appear to be less exciting or challenging.
Franchising has many benefits, not only because it taps into pre-existing marketing channels but also because it creates a built-in support network for new owners and standardizes products, services, and other operations within the brand. Read on as this article discusses the five reasons why franchising is more secure than starting your own startup.
Table of Contents
1. Brand Awareness is Already Built-In
When you open a franchise outlet, you already have built-in brand awareness because you are part of an existing brand. This was definitely not the case when you started your own company, because you had no brand recognition at all! You’ll also have to worry less about marketing your product or service since the parent brand will do that for you. The brand awareness of the franchise’s name will give you instant credibility. You’ll also have access to the parent company’s marketing and advertising materials to help you promote your business. When you’re the CEO of a startup, you have to do all of your marketing yourself.
Marketing budgets are often a huge problem for startups, especially those in the early stages. Franchising will also allow you to piggyback on the parent company’s reputation. If the brand is well-known, then people might be more likely to try your outlet as well because they trust the parent company. This is especially true when you’re an owner of a B2B franchise, as it will give you the leverage to benefit from an already successful and recognized brand. It is to such an extent that it will allow you to get an instant customer base because of the brand identity that you carry.
2. You Have a Network of Support From Day One
When you start a traditional business or even an independent franchise, you’re alone. You do everything yourself, from payroll to marketing and everything in between. With franchising, you have access to a network of support. In fact, the parent company will expect you to use it. You’ll be connected with fellow franchisees, who can offer advice and even mentoring. You’ll also have the backing of the parent company, which can help you with HR, operations, legal issues, and more. You might even be able to hire the parent company’s staff as independent contractors.
This way, you get the expertise you need without paying a ton in salaries. This network is invaluable if you’re just starting out. In that case, it is important that you make your research before you jump into this kind of business. Whether you’re a newbie or have some experience managing a business in the past, it’s recommended that you seek guidance from a franchise consulting company to make sure you know all your options before you start your dream franchise business, because after all who wants to get into the wrong direction – no one.
3. Standardized Operations and Services
If you open a franchise, whether it’s related to food, clothing, or even property management franchise, you can expect the parent company to provide you with standardized operations and service manual. This will help you ensure that your operations are consistent with what people expect from the parent company. Franchising is about more than just brand recognition. It is about standardizing the way you do business, making it easier for you and your employees.
This can be particularly important if you are opening a restaurant or other type of food business. You don’t want health inspectors shutting you down or customers getting sick because someone didn’t follow proper food safety procedures. No one wants to deal with the PR nightmare that comes with something like that. But this is just one example of the benefits of standardizing operations. You’ll also have access to other tools, like a computer system or other ways to automate your business.
4. Risk Management and Protection for Franchisors and Franchisees
As a franchisor, you will have restrictions on how you can treat your franchisees. This is to protect both you and your franchisees. Rules like these help to minimize risk for both parties. Having a business franchise is a win-win situation for both the franchisor and the franchisee who has a leg up on the competition. Similar to the franchisee, franchisors benefit from these restrictions as well.
Recouping initial investment is more secure for both parties since franchising is a heavily regulated industry. The business model itself provides both parties with protection from lawsuits from a third party. Since the relationship between franchisor and franchisee is heavily regulated, franchisees cannot sue each other in open court. Instead, they must go through arbitration or mediation through the International Franchise Association (IFA).
5. Confidence in the Franchising Industry
Overall, the franchising industry is more confident than the startup industry. The SBA only reports a failure rate of 4% in franchising, as opposed to a whopping 50% failure rate for startups. Additionally, this kind of business model has a long history and proven track record. It has been around for decades, and there are plenty of successful franchisors currently operating. Many of them have been around for decades and even a few since the early 1900s!
The same cannot be said for startups, which are always risky and new beginnings. Franchising is not without its risks, of course. But these are mitigated by the built-in support networks, standardized operations and services, and risk management that comes as part of the package. In short, it is a safer bet than starting your own business.
Final Thoughts
Whether you decide to franchise or start your own business, you’ll have to research the industry thoroughly. You’ll need to thoroughly investigate the competition, find out which industries are growing, and pick a niche in which you can succeed. You’ll also need to make sure you have the capital you need to start your business. Once you’re up and running, you can expect the rewards to be worth the effort. Franchising has many benefits, not only because it taps into pre-existing marketing channels but also because it creates a built-in support network for new owners and standardizes products, services, and other operations within the brand.
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