The Franchising Game: 6 Ways that Franchising is Great for Entrepreneurs

Every single day, many people have great, money-making ideas. The vast bulk of those ideas never get beyond a momentary whim because the person who had the idea doesn’t have the capital, the know how or the ability to make them happen.

By the same token, many people who have knowledge, money and ability never have a great idea to generate lots of wealth. Innovation does not equal ability and just because you cannot build a better mousetrap doesn’t mean the world shouldn’t beat a path to your door.

McD, NYC – photo credit: Melfoody / Flickr

What is franchising

Vague references aside, franchising is a way for investors to buy and build a business based on a proven model with reduced risk. In most franchising models, the brand name is one of the most important parts of the contract.

It would be relatively simple to mimic how McDonald’s cooks and serves their food, but without the golden arches towering over your restaurant, you will be losing a large part of your potential customer base because they have never heard of you.

Franchising gives your business the model and the brand name to be successful. There are restrictions, of course, depending on the franchise you may have little independence to step outside of corporate boundaries – who has ever heard of McWaffles, after all – but name recognition and proven sales make it easier for you to succeed.

Advantages for franchisees

Investing in a franchise carries very specific advantages.

  • Brand recognition. As discussed above, this is the major advantage.
  • Preexisting structure and support network. Taking advantage of your franchiser’s marketing and transportation system will build visibility for your business. This holds true, especially, for nation- or world-wide chains that have strong brand name appeal.
  • Technical and business support. One of the major advantages that franchisees can look forward to is access to the franchiser’s support network.
  • Minimal investment. Building a franchised business costs less than building a comparable business without the advantages of franchising. Taking advantage of existing corporate structures means that the franchisee doesn’t have to build or hire them on his own.
  • Reduced risk of failure. Since you are capitalizing on a proven idea, there is less of a chance of your product or service not being marketable.
  • No prior experience is necessary. Most franchises offer all the training you will need to successfully operate your business – remember, their reputation is on the line as well – and is a good way to jump into an area you are interested in without formal training.

There are disadvantages to franchising, as well. You have less independence for carrying what you want, there are corporate policies that you will have to follow, there are initial and possibly ongoing fees and, in many cases, you are reliant on the franchiser for product.

Buying a franchise is a business decision and the rewards need to outweigh the risks for it to be a sound investment. You will have to decide whether it is good for you.

The UPS Store
photo credit: Gexydaf / Flickr

Testing the waters

There is a simple way to see if there are interesting franchise opportunities near you. In your neighborhood or city, just to see what appears good to you. Pick a business and do a Google search on your phone or computer. For example, ‘iPhone screen repair near me’ and see what businesses show up. Many of these will have franchise opportunities and a quick visit to their website or phone call would confirm whether they are looking for franchisers in the area.

Harnessing the power of a corporation to establish your own business is a tried and tested means of creating your own business. Standing on the shoulders of pioneers is a terrific way for you to grab your chance at success.