“Major advantages and benefits of buying a franchise business”
Minimize Your Risk: One of the primary and major reasons you should consider buying a franchise business opportunity (versus buying an existing independent business or starting one from scratch ), is it gives you the opportunity to go into business for yourself with an excellent chance of success, while at the same time minimizing your risk of failure.
Starting a new business is inherently risky. Most studies conclude that over 90% of new businesses fail within 3 to 5 years. In comparison, U.S. Dept of Commerce studies have shown that over 92% of franchised businesses are still operating after 5 years in business.
Buying and owning a franchise is not for everyone. And there are some obvious disadvantages to buying into a franchise business like the lack of complete control and required payment of franchise and royalty fees for example. If you do not like following a model or structure, this might not work for you. That being said, the overwhelming success of franchising as a viable and proven business model is simply undisputable.
Below is a list of other well known advantages and benefits of buying and starting a franchise business today.
- Risk Reduction: Franchise industry stats indicate that the franchise business failure rate is approximately 2 to 3%, compared to over 80% for all new independent businesses started.. Although some small business experts believe that the failure rate for franchise businesses is higher that 3%, it is still is significantly lower than going it alone.
- Proven Business Model: One of the major hallmarks of franchising is that it can offer entrepreneurs a turnkey business model with established and proven operating systems, services, and products already in place. Having a proven system already in place eliminates the guesswork and errors a common business owner would normally face.
- Financial Assistance: Lenders are usually very comfortable financing the purchase of a franchise because they already have a proven track record. Bankers usually look at franchises as having a lower risk of repayment default and are more likely to loan money base on it.
- Management/Consulting Assistance: An established franchiser can offer a wealth of knowledge and training on how to successfully manage and operate a franchise business. Keep in mind that the Franchiser has a vested and shared interest in your success and will provide the support and training necessary to ensure you are ultimately successful.
- Franchise Site Assistance: Most retail franchise companies play a very active role in helping new franchisees select locations that have the best chance of providing good traffic and exposure. They can also help negotiate leases and provide invaluable advice and assistance during the build out phase of a retail location.
- New Products and Services Development: To stay competitive in the market place most successful franchise companies will devote the necessary time and resources to develop new and profitable products and services.