People decide to invest in a franchise for a variety of reasons: they want to be their own boss; they’re looking to embark on a new career path; they’re hoping for more financial independence. The reasons are many and the allure of owning your own business is strong. As long as there have been franchises, there has been the question: Should I invest in a franchise or just start my own business? While there is no black and white answer, Your Franchise is Waiting has put together this list of the Top 5 Reasons to Invest in a Franchise (And Not Start Your Own Business).
- Inherited Best Practices
When you invest in a franchise, you’re already starting miles ahead of starting a small business that is not part of a franchising network. When you invest in a franchise, you become part of a “club.” And some of the perks that come with your membership to this club are that you immediately gain access to a support network who takes a keen interest in your success. This support network is a key resource, because you can tap into other franchisees to ask them about lessons learned, pitfalls to avoid, and other questions that you’d be left answering on your own if you were not part of a franchise network.
Buying into a franchise also provides best practices on how to not only run a small business, but how to do so efficiently and successfully.
- Marketing Support
Tapping into a franchise also often means that you’re benefiting from brand recognition. Brand recognition and marketing from the parent company is essential to any franchise. Marketing applies not only to national ad campaigns run by the organization, but it can be as specific as getting help from the franchisor before your doors open to ensure that your marketing plan and associated budget for your initial grand opening, and ongoing marketing efforts, are successful.
- Brand Recognition
There is something about brand familiarity and recognition that goes a long way with consumers. Franchises hold a lot of sway for consumers, and because many franchises are so ubiquitous, people will often opt for familiarity rather than try something unfamiliar. That sentiment often puts smaller businesses at a disadvantage over the more well-known franchise options. In fact, research shows that “brand awareness plays an important role in the consumer decision making” for several reasons. For starters, “it is important that consumers think of the brand when they think about the product category” (whether that product category is burgers, haircuts, or oil changes, for example). And the more awareness the consumer has of a brand, they will give that brand more consideration before making a purchasing decision.
Additionally, according to research, “brand awareness can affect decisions about brands in the consideration set, even if there are essentially no other brand associations..” And while this behavior isn’t typical of all consumers, it is frequent enough that it is worth considering whether or not starting your own business or investing in a franchise will yield stronger brand recognition – now or in the future as the brand grows. (1)
- The Value of Teamwork
As any entrepreneur would tell you, starting your own business is difficult, and it is often lonely being the only person responsible for everything your business needs to be successful.
One of the benefits of investing in a franchise is that you’re automatically plugged into a network where everyone is rowing in the same direction. In other words, you are able to steer your franchise the way you see fit (to a degree), while still having resources to draw from, instead of having to start from the beginning every time. In addition, when other franchisees are running solid operations and give the company a strong brand value, you benefit from that. The same holds true when your franchise is running well. As the saying goes, “A rising tide lifts all boats,” and this is especially true for franchises.
- Reaching Scale and Profitability
For many small businesses, getting out of the red and into the black is a long, arduous process. Between capital investments, marketing, and dealing with various suppliers, the road to profitability is mired with obstacles, and each of these obstacles present their own financial challenges.
Franchises require similar investments, but the key difference is the established best practices that you buy into when you invest in a franchise. Additionally, because you have the support and backing of a large national organization, you can benefit from the increased buying power the company represents when dealing with suppliers. Such efficiencies of scale mean you can often get the necessary supplies and resources you need to run your franchise for a lot less than if you were a small business operating without the resources of a larger company.
Profitability and overnight success isn’t guaranteed when you operate a franchise, just as it isn’t guaranteed for small businesses. But when you take the support and institutional knowledge that you gain when you invest in a franchise, a lot of the typical “unknowns” come into a bit more focus, and you can rely on a strong network of people to help get you to where you want to be.
One final note: Investing in a franchise allows you to reach well beyond your background and experience to launch into an entirely new field. Most franchisors are not looking for partners with experience in that particular industry. They are looking for hard workers, willing to follow their systems and stick it out through the difficult early years of owning a business. One of the fun things about investing in a franchise – is the ability to step completely out of your base of knowledge and dive into something new. The challenge and exhilaration of steering your own ship and building a successful business in an entirely new field cannot be overstated.