Business Incorporation

Why Franchise my Business

Is deciding on a business idea preventing you from starting a company? Then think about buying a franchise instead to have access to a myriad of franchise ideas. It saves you the trouble of trying to persuade people to change brands by taking advantage of popular products that they already enjoy. You will avoid the marketing hassle of advertising something new and have access to an instant following. Feel free to give yourself the challenge of a new concept, but otherwise choose an area to focus on from a franchise list.

Pros and Cons of Franchising

Money is the key to any new business, and in a franchise it’s especially important since you need to be able to collect enough to buy one. In order to save your money to use to run your business before it becomes profitable, you can seek franchise financing to help. Having an instant customer base also means saving the energy of marketing your business. You therefore don’t need to be an advertising guru to be successful because people will follow a brand they love. In a franchise though, there is strict control over the ad campaigns they use, the products they sell and the sales they put on, so you will have little freedom over those areas. Franchising is therefore ideal for someone who wants to be a manager more than someone who wants to launch a new and original concept.

The First Step to Take

Determine your strengths to settle on an industry. If you want to get someone else to manage for you, then choose any business you want, but otherwise, choose something you’re good at. A franchise directory can help you see what is available to buy once you have a focus. Securing franchise finance is the next move, and this can be achieved easier if your complete plan, expenditures, profits and work are outlined in a business plan. Not only will it keep you concentrated on the goals at hand, but it will also help you attain the loan. Ordering supplies and hiring workers will then be next on the list when your loan has been approved.

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Why Franchise my Business

To open a business franchise is a smart and easy solution because the brand you are selling is already familiar. If marketing is not your strong suit and you don’t know how to introduce a new item, going with a franchise is a solution that can make you your own boss without those problems. You can establish your business based on a brand that is already popular. You will not need to try to market a new item but will be able to take advantage of everyone who already loves your product. It is a quick solution to getting started and something you should consider if you are not very savvy in marketing.

Franchise Benefits and Drawbacks

Owning a franchise comes with many benefits and drawbacks. On the plus side, you are working with an established brand that gives you an instant customer following. It also makes it easier to find staff since they are more likely to want to work for businesses they know. The franchisor will provide an automatic support system, and purchasing stock will be less expensive since your prices will correspond to what is offered for a franchise. However, because of the franchise rules you have to follow, you will not have as much freedom to run your business your way. You also have to pay royalties for the franchise name as well as coming up with the money to buy the franchise up front, which can make it financially difficult for many people to undertake.

The Way to Start a Franchise

Your first step in getting a franchise is knowing what industry you want to look into. Being aware of the franchises on the market can be done by reading a franchise directory. Franchise financing is your next step to ensure that any money you may have already saved gets reserved for startup costs. Your franchisor could help you attain franchise finance if you can’t get it through The US Small Business Administration or commerical non-SBA lenders. Once the franchise is picked and the financing is attained, start working on a business plan to put your ideas into motion.

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The cost of franchising is often a smaller investment than the cost of establishing even one new outlet. After paying the cost of the franchise program, the remaining costs of expansion (as well as most of the risk) are assumed by franchisees. And since franchisees usually pay the franchisor an up-front fee and royalties, the right strategy for selling your franchise idea can become an immediate high-impact low-risk revenue source

In addition, the fixed and variable expenses involved in running a franchise company are much lower than operating a similar number of company-owned facilities.

You probably already know how much you would pay to establish a new company-owned copy of your existing business. 

If you own a restaurant, for example, the cost of buying land and construction, or even the cost of leasehold improvements and furnishings in an existing building, could easily run between $100,000 and $200,000 or more.   What you may not know is that for the same amount, or less, you can have a complete franchise development program.  And whereas the new company-owned unit might require a year to establish and might not be profitable for another year or two, your franchise program will probably take less than a year to put together and enable you at the end of that period to sell franchises and immediately begin to recoup your investment.  If your franchise fee is $35,000—an average nowadays—and if in your first year as a franchisor you sell seven franchises (another average for franchisors according to a study by DePaul University) you could have your program paid for by the end of that first year. 

Some businesses are standing by and waiting for this economic storm to blow over while others are positioning their companies to succeed in spite of the downturn. 

What are you going to do with your business?Are you going to push forward and expand your business despite what your competitors are doing?How can you take advantage of this opportunity without having to spend your own money to fuel expansion?  You need to leverage your intellectual property.Expanding your business by franchising may be the only option for you. 

With all of the highly skilled people out of work franchising companies are taking advantage of the greatest supply of highly educated individuals that they have ever seen.  With unemployment believed to continue to rise over the next year, this opportunity will continue on for a while.  Though, once this recession is over and companies stop laying people off and start hiring them again, you may well have missed your window of opportunity to sell franchises in this fertile environment.

The fact is people have lost faith in what have become accepted as “safe” investments.  In spite of losses in 401k’s and home values, people still have money that they can access.People will still borrow funds from family and friends that willingly contribute to a new business venture which has always been a source of new business capital.This will not stop in spite of the economy.

The challenges of today’s economy may have just created the “perfect storm” and the best opportunity for franchising your business. The greatest fear you should have is sitting back while one of your competitors pushes forward.

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